Question

Advertisement (paid for 3 years from 01.10.2019) total amount =6000​

Answer 1

Answer:

Advertisement paid for 3 years

Explanation:

Please read thoroughly, explained as under:-

There are certain expenses, the effect of which remain for so many years. I mean to say that the amount spent on advertisement will benefit to us for 3 years.

Here amount paid for advertisement total to Rs.6000.00 and the benefit of this amount spent will remain for 3 years.  therefore, 2000.00 will be treated as expenses for this year and remaining 4000.00 will be set off in coming 2 years and will be termed as advance paid expenses (in accounting terms it is called Prepaid expenses)

As such the entry will be

Advertisement (Expenses) A/c Dr.         Rs 2000.00

Prepaid Expenses (Advertisement) Dr   Rs.4000.00

 To cash/Bank (as the case may be)                 Rs.6000.00