at the end of 31 december, Shein traders made a payement of N$50 000 for insurance for the month of january 2021, at the end of 31 december 2020 this transaction should be treated as? site

Question

Social Studies

Ashten

19 August, 02:19

at the end of 31 december, Shein traders made a payement of N$50 000 for insurance for the month of january 2021, at the end of 31 december 2020 this transaction should be treated as? site

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Gillian Castaneda · Answer 1

A prepayment

Explanation:

A prepayment refers to a payment by a business as an advance payment for goods or services to be received later in the future. A prepayment is also known as a payment in advance.

A prepayment is recorded an asset under the current assets in the balance sheet.

Since the $50,000 payment is made by Shein traders for insurance for the month of january 2021, at the end of 31 december 2020 this transaction should be treated as a prepayment and included under the current assets in the balance sheet.