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CBSE Class 12-commerce Answered

In retirement of partner what would be the treatment of the line ...out of the insurance debited to profit and loss account Rs1000 be carried forward as prepared insurance.and why?
Asked by Smitakhadayate20 | 18 May, 2019, 07:29: PM
answered-by-expert Expert Answer
At the time of reconstitution of the partnership firm, various adjustments are to be given effect for in order to identify the correct values at the time of such reconstitution. 
If it is given in the question that some amount of expense is prepaid and is to be carried forward, then it means that such amount of expense is an expense of the current year, and therefore, will be treated as an asset. This is because the amount of expense is paid in advance, the benefit of which will be available in the following year or years.
Answered by Surabhi Gawade | 20 May, 2019, 09:45: AM

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