Use the information below to answer the following questions:
Data Ltd uses accrual accounting and its financial year ends on 30 June. Expenses paid in advance are treated as assets. On 1 May 2011, Data Ltd pays $480 for a one-year fire insurance policy that expires on 30 April 2012.
-Which of the following will appear on Data Ltd's balance sheet at 30 June 2011?

Question

Quizplus · Accepted Answer

By 30 June 2011, two months of the insurance policy have been used, so $80 ($480/12 months * 2 months) is the insurance expense. The remaining $400 is prepaid insurance and will appear as an asset on the balance sheet.

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