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at 31 december 2002 the following matters require inclusion in a companys financial statement :
1, the company paid insurance $9000 IN 2002, COVERING THE YEAR ENDING 31august 2003.
2, in january 2003 the company received rent from a tenant $4000 COVERING THE SIX MONTHS to 31 december 2002 .for these items what total figure should be included in the companys statement of financial position at 31 december 2002 for receivables and prepayments ?
sir in the above question please explain the fulll question and what you meant by COVERING THE YEAR ENDING 31AUGUST 2003 and COVERING THE SIX MONTHS TO 31 DEC 2002 ?
Thank you !!!
“Covering the year ended 31 August 2003” is standard terminology in the exam, and means that the insurance payment is for the period 1 September 2002 to 31 August 2003.
Similarly, “covering the six months to 31 December 2002” means the receipt is for the period 1 July 2002 to 31 December 2002.
You should now find the question very straight-forward (and you can of course check your answer with the answer in the Course Notes).
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