Insurance prepaid is shown on the asset side of the balance sheet due to __________________.

Cost concept

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Matching concept

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Business entity concept

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Going concern concept

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Solution

The correct option is D Going concern concept
As per going concern concept, Prepaid insurance is shown on the asset side of the balance sheet. This concept states that business has an indefinate life. Therefore, not all the expenses are shown as expense instead some are shown as asset.

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Similar questions

Q. The cost of a small calculator is accounted as an expense and not shown as an asset in a financial statement of a business entity due to __________________.

Q. Fictitious assets are shown on the asset side of the balance sheet of a company under the heading ________.

Q. According to the going concern concept, a business entity is assumed to have ______.

Q. The balance sheet is a __________ of the assets, liabilities and capital of concern as on particular date.

Which concept is the reason behind accounting the cost of a small calculator as an expense and not as an asset in financial statements of a business entity?

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Insurance prepaid is shown on the asset side of the balance sheet due to __________________.

The correct option is D Going concern conceptAs per going concern concept, Prepaid insurance is shown on the asset side of the balance sheet. This concept states that business has an indefinate life. Therefore, not all the expenses are shown as expense instead some are shown as asset.

The correct option is D Going concern concept
As per going concern concept, Prepaid insurance is shown on the asset side of the balance sheet. This concept states that business has an indefinate life. Therefore, not all the expenses are shown as expense instead some are shown as asset.