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Q7(9)PSA

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Financial & Managerial Accounting
Found in: Page 154
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

In the blank space beside each numbered balance sheet item, enter the letter of its balance sheet classification. If the item should not appear on the balance sheet, enter a Z in the blank.

A. Current assets

B. Long-term investments

C. Plant assets

D. Intangible assets

E. Current liabilities

F. Long-term liabilities

G. Equity

9. Prepaid insurance

The correct answer is A. Current assets

See the step by step solution

Step by Step Solution

Definition of Insurance

Insurance is the security purchased for assets and individuals to minimize the risk of loss in monetary terms.

Reason of choice

Prepaid insurance is the amount paid for the premium of the insurance that becomes due in the future but before the completion of the accounting year, so it should be disclosed as the current asset until it becomes due and expensed.

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