The accounting period of Mosh Pitt runs from January to December 2016. At the beginning of July 2016 the business pays 1,200 for a 12 month insurance policy. How much of this payment relates to the accounting period ending 2016 and how much relates to the following accounting period (2017)? 6 months incurred in 2016 = 600 in 2016 6 months incurred in 2017 = 600 in 2017 How would this transaction appear in the financial statements? In 2016: Expense of 600 on the statement of profit or loss, Asset (prepayment) of 600 on the statement of financial position. In 2017: Expense of 600 on the statement of profit or loss, nothing on the statement of financial position