2. Accruals

Question 1

What is the accounting treatment for accruals?

What is the journal entry to record the accrual?

Answer 1

An accrual will be shown in the statement of financial position as a current liability. It is a liability because the business has an obligation to pay for the expense in the future.

Debit - Expense account (Statement of profit or loss)
Credit - Accrual (current liability on the statement of financial position)