a business arranges insurance for a vehicle purchased on 1 october 2016 the charge f 611257

A business arranges insurance for a vehicle purchased on 1 October 2016. The charge for insurance of £1,000 is to cover a six-month period starting on 1 October. Given, with a financial year-end following the calendar year, that half of this charge belongs to the next financial year, the account for insurance would appear as follows:

Insurance

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2016

£

2016

£

1 Oct

Bank

1,000

31 Dec

Income statement

500

31 Dec

Balance c/d

500

1,000

1,000

2017

1 Jan

Balance b/d

500

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