Help!! Accruals & Prepayment

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Can anyone explain to me in simple terms how to work out an accruals figure.

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Help!! Accruals & Prepayment

    <BR> Hi there. Accruals is simply the amount owing in the accounting period. If your annual rent is £1,200, and you've only paid £1,100, you have a rent accrual of £100. The double entry would be Debit Rent a/c £100, (expense in P&L), and Credit Accruals £100, (liability on Balance Sheet).<BR><BR> It's important that you look at dates given. E.g. if your year end is 31st December, but you've only paid rent till 31st October, you need to work out those two months rent owing, (divide rent by the 10 months paid, to give monthly figure, then multiply that by 2 months owing, to give you the accrued rent. Or it might tell you the annual charge in the information).<BR><BR> Hope this has been of some help. <BR><BR> Scotty.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Help!! Accruals & Prepayment

    Another practical exercise and one used in industry is to look at what goods you have been invoiced for in a month and what goods you have actually received. If you were a glassmaker, for example, you may have received 1000 tonnes of sand in a month according to your goods received notes. If you have only been invoiced so far for 800 te's then you would need to accrue for the other 200te's ( volume x price )<BR><BR>David
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Help!! Accruals & Prepayment

    Thanks,<BR>That really helps - not long now!!!!!!!!!!!

Categories

Privacy Policy