NOP Ltd purchased a one-year insurance policy on 1 April. The entire premium of $8000 was recorded
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NOP Ltd purchased a one-year insurance policy on 1 April. The entire premium of $8000 was recorded by debiting prepayments. Year-end is 30 June.
1 Give the 30 June entry using transaction analysis.
2 What amount should be reported in the 30 June balance sheet for prepayments?
3 If no adjusting entry was made on 30 June, by how much would net profit be overstated or understated?
Would assets be overstated or understated?
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Related Book For 
Fundamentals Of Accounting And Financial Management
ISBN: 9780170454797
8th Edition
Authors: Professor Ken Trotman, Kerry Humphreys
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