Accounting Multiple Choice Question – 11 December 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

In the balance sheet of a sole trader, prepayments should be shown as . . .

Select ONE answer:

  1. a deduction from capital.
  2. part of creditors.
  3. a deduction from current liabilities.
  4. part of current assets.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

  1. Not correct
  2. Not correct
  3. Not correct
  4. Correct – Prepayments are amounts paid in advance in respect of expenses. As this means that the benefit of the money paid is yet to be received, prepayments are clearly an asset (a resource). As the advance payment normally covers no longer than the next 12 months, this asset is a current asset.

 

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