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Hi John,
at one of my multiple task questions in exam kit I have the following affirmation.
“At 30.09.201×3, a prepayment for insurance paid in advance of 400 $ had not yet been accounted for. Insurance is classified ad administrative expense.”
The amount in TB for admin expense is 65800 $ and I don’t understand why the amount of 400 $ is substracted from the amount of 65800 mentioned in trial balance, and not charged.Thank you,
camelia
The amount in the TB will include all of the cash paid during this year for insurance. It will include the $400 paid in advance (since this has not been dealt with).
However that means that $400 of the total is actually next years expense and not an expense of this year at all. So it needs removing from the current total.
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