6.Accurals and prepayments

Question 1

Accruals

Answer 1

Expense or income that have been incurred or eared during the period but that has n

Question 2

Accruals Principle

Answer 2

Fundamental accounting principle that states that income and expenses shown in the statement of profit and loss should be those hat were earned or incurred during the period rather than simply the cash received or paid

Question 3

Accrued expenses

Answer 3

Expenses that have been incurred in the but have not been invoiced/paid in the period are said to be accrued

Question 4

Formula for accrued expenses

Answer 4

Expenses incurred - not yet invoiced/ paid

Question 5

What is an Accrual on the SFP

Answer 5

A liability

Question 6

What do we debit and credit in an expensed and accrued expense account

Answer 6

Credit: Accrued expense account (a current liability)

Debit: Expense account

Question 7

What happens to the accruals at beginning of the next accounting period

Answer 7

They are reversed The Accrued expense account is debit

The Expense account is Credited

Question 8

Prepaid expenses

Answer 8

When an expense has been paid in the accounting period but it relates to the following accounting period