CA Foundation · Accounting · Final Accounts of Sole Proprietors
In the balance sheet of a sole proprietor prepared in the vertical format, which of the following is classified under current assets?
Prepaid insurance is a current asset because its benefit will be used up within twelve months of the balance sheet date. Goodwill and furniture are non-current assets, and a long-term loan given is also non-current, so none of them belong under current assets.
- APrepaid insuranceCorrect
- BGoodwill
- CFurniture and fixtures
- DLong-term loan given to a relative
Explanation
Prepaid insurance represents a benefit that will be consumed within the next twelve months, so it is a current asset. Goodwill is an intangible fixed asset, furniture is a fixed asset, and a long-term loan given is a non-current asset.
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