Eddy's statement of profit or loss for his first year of trading to 30 September 2019 showed a charge for insurance of £9,000. Eddy actually paid £13,000 for insurance during that financial year. Which of the following statements is true? a.Insurance had been prepaid by £4,000 at the year end. b.Insurance of £4,000 had been accrued for at the year end. c.Insurance of £9,000 had been accrued for at the year end. d.Insurance of £9,000 had been prepaid at the year end.

In profit and loss a/c we record only that much of expense which was incurred / accrued for that…

Answered: Eddy's statement of profit or loss for…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Eddy's statement of profit or loss for his first year of trading to 30 September 2019 showed a charge for insurance of £9,000. Eddy actually paid £13,000 for insurance during that financial year. Which of the following statements is true?

	a.	Insurance had been prepaid by £4,000 at the year end.
	b.	Insurance of £4,000 had been accrued for at the year end.
	c.	Insurance of £9,000 had been accrued for at the year end.
	d.	Insurance of £9,000 had been prepaid at the year end.

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