Question

A company pays insurance premium of ₹24,000 for 12 months in advance in March 2025 for the period January 2025 to December 2025. The accountant records the entire amount in the Profit & Loss account of FY 2024–25. Is this treatment appropriate?

A Yes, because the payment is made during the same year
B No, the entire amount should be capitalised
C No, because ₹18,000 should be carried forward as prepaid expense
D Yes, because the matching principle is not applicable
E None of these
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