How did the sundry creditors end up being 90000? Where did the prepaid insurance of 1000 come from? Also, how does the end note about the proprietor apply to this question?
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ALSO,
Prepaid expense is an expenditure paid for in one accounting period for an underlying asset that would not be consumed in the same period. This is charged to expense once the asset is consumed. This is the reason prepaid insurance is treated as a prepaid expenditure since, the expenditure incurred on Insurance in this year is related to next year. This would ensure recognition of expenditure in the relevant accounting period.
Hope this helps.
Regards
Your query is unclear and incomplete. Kindly post question properly so that our experts may help you in a meaningful way.
ALSO,
Prepaid expense is an expenditure paid for in one accounting period for an underlying asset that would not be consumed in the same period. This is charged to expense once the asset is consumed. This is the reason prepaid insurance is treated as a prepaid expenditure since, the expenditure incurred on Insurance in this year is related to next year. This would ensure recognition of expenditure in the relevant accounting period.
Hope this helps.
Regards