Week 2 - The Accruals Concept Flashcards
1
Q
What are accruals?
A
Money that is owed at the end of the year that are not yet paid
2
Q
What is a prepayment?
A
When we pay for something in advance
3
Q
What is an example of an accrual?
A
Imagine we get a bill that comes in the day after our financial year, but this bill relates to that previous financial year. We need to include that figure in that year’s accounts - add it in as an extra expense
