Question 1

A company pays an annual insurance premium of $12,000 on 1 September 20X2 for the year ending 31 August 20X3. The company's financial year end is 31 December 20X2. What is the prepayment amount to be recorded in the statement of financial position at 31 December 20X2? (Enter numbers only)

Accepted Answer

Calculate how many months of the paid premium relate to the following financial year.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Calculating the expense for the year ($4,000) instead of the prepayment.

A company pays an annual insurance premium of $12,000 on 1 September 20X2 for the year ending 31 August 20X3. The company's financial year end is 31 December 20X2. What is the prepayment amount to be recorded in the statement of financial position at 31 December 20X2? (Enter numbers only)

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 2

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