A club paid subscription fees of `1,400. Out of which ` 200 is prepaid. In such case
Correct answer: A. Both B. and C. above
- A. Both B. and C. above
- B. P&L A/C is debited with 1,200
- C. 200 is shown as current asset
- D. P&L A/C is debited with 1,400
Explanation
Only the amount relating to the current period is an expense: 1,400 minus the 200 prepaid equals 1,200 debited to P&L. The 200 paid in advance is shown as a current asset, so both statements B and C are correct.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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