Accruals and Prepayments

Question 1

Accruals

Answer 1

Recording an expense that was recorded in one accounting period but not paid until a future accounting accounting period.

Question 2

Prudence

Answer 2

Income and assets are not deliberately overstated and expenses and liabilities are not understated.

Question 3

When will accruals and prudence be used in accounting?

Answer 3

Accruals - current liabilities

prudence - income