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    Question

    A prepayment of insurance premium will appear

    in
    A The trading account on the debit side Correct Answer Incorrect Answer
    B The profit and loss account on the credit side Correct Answer Incorrect Answer
    C The balance sheet on the assets side Correct Answer Incorrect Answer
    D The balance sheet on the liabilities side Correct Answer Incorrect Answer

    Solution

    The prepayment of insurance premium is recorded as an asset in the Balance Sheet because it represents the amount paid in advance for future benefits. Hence, it is shown on the debit side of the Insurance Account.

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