If a Company Pays a 12-Month Insurance Premium for $2400

Multiple Choice

If a company pays a 12-month insurance premium for $2400 on 1 June 2016,then at 30 June 2016 the accounts will show:

A) a prepayment of $2200 in the balance sheet and an insurance expense of $200 in the profit and loss account.
B) a prepayment of $200 in the balance sheet and an insurance expense of $2000 in the profit and loss account.
C) a $2400 asset in the balance sheet.
D) a $2400 expense in the profit and loss statement.