A-LevelAccountingPreparation of financial statements9706/12 · May/June 2013 · Q21 Mark
A business paid $5750 during its trading year for advertising. Part of this amount included $500 in respect of the next financial year. Which effects would the correct treatment of the $500 have on the financial statements?
Aprofit for the year decrease, net current assets decrease
Bprofit for the year decrease, net current assets increase
Cprofit for the year increase, net current assets decrease
Dprofit for the year increase, net current assets increase
✓ Correct answer
D: profit for the year increase, net current assets increase
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