accruals & prepayments

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Hi can ayone tell me why it is necessary to adjust the year end figurs for accruals and prepayments.

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:accruals & prepayments

    It's all to do with the matching principle. Income must be matched with the expenses used to incur it - if you don't add the last quarter of electricity to your heat, light and power expenses (which have been used to generate the income) then you are not matching which is a core concept of accounting and a part of FRS 18.

    Annette

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