A club paid subscription fees of `1,400. Out of which ` 200 is prepaid. In such case

A. P&L A/C is debited with 1,400
B. P&L A/C is debited with 1,200
C. 200 is shown as current asset
D. Both B. and C. above

Adjustments for prepaid subscription fees:
P& L A/c Extract
Total subscription fees paid 1,400
Less: Subscription fees prepaid
Relating to next A/c period 200
Subscription fees 1200
The prepaid subscription fees of ` 200 will be shown as a current asset in the Balance Sheet as it is
an expense relating to the next accounting period but has been paid in the current accounting

The Correct answer is D. Both B. and C. above

Leave a Reply

Your email address will not be published. Required fields are marked *