Question

Prepaid Insurance appearing in the Trial Balance is shown:

• A. On the credit side of Trading Account
• B. On the assets side of Balance Sheet
• C. On the credit side of Profit & Loss A/c.
• D. None of these

Answer 1

The correct option is B On the assets side of Balance Sheet

Prepaid expenses are expenses which have been paid in advance and not yet used. Prepaid insurance is the part of insurance which is already paid but the time period for use is not expired till the date of balance sheet. It is a part of current asset which has not been used. Thus it is written on the asset side of balance sheet until it is utilised.