Further aspects of financial statements

Question 1

Adjustment

Answer 1

an adjustment should be made at the end of the financial year to allow for accruals and repayments of income

Question 2

In the financial statements, prepayments of income are:

Answer 2

Added to the income in the trial balance

Shown as a current asset ( other receivables ) in the statement of financial position

Question 3

Recovery of an irrecoverable debt

Answer 3

When a former trade receivable, whose account has been written off as irrecoverable, makes a payment either voluntarily or as a result of debt collection procedures.

Question 4

Recovery of an irrecoverable debt is recorded as income and its bookeeping entries are

Answer 4

Debit cash/bank account
Credit recovery of irrecoverable debts account