ACCRUALS & PREPAYMENTS
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Hi Hope some one can help,
I thought that i was fine with accruals & Prepayments, but i have been revising and looking at some of the old past papers, and i seem to struggle a little bit with one thing with the BF figures & Carried Forward Figures
When you are dealing with accruals i understand that sometimes you might need to put an accrual through to make sure it makes up with the exact charge that it should be, but i am unsure of how to deal with it after, would the amount of the accrual stay say on the Electricty as a credit balance, so then when we are going into the account next period it would reduce, just need someone to clarify about the B/F and C/F on accruals & Prepayments.
Think ime just panicking a bit thats all.
Thankyou Zoe
I thought that i was fine with accruals & Prepayments, but i have been revising and looking at some of the old past papers, and i seem to struggle a little bit with one thing with the BF figures & Carried Forward Figures
When you are dealing with accruals i understand that sometimes you might need to put an accrual through to make sure it makes up with the exact charge that it should be, but i am unsure of how to deal with it after, would the amount of the accrual stay say on the Electricty as a credit balance, so then when we are going into the account next period it would reduce, just need someone to clarify about the B/F and C/F on accruals & Prepayments.
Think ime just panicking a bit thats all.
Thankyou Zoe
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Comments
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Re:ACCRUALS & PREPAYMENTS
A prepayment has a debit Balance and therefore the Brought down closing balance of Prepayment will be a debit.
Therefore, the Carried down Closing Balance of Prepayment will be credit.
Example
rent prepaid in 1st January 04 amounted to 350
Total payments for rent during the year was 1200.
31st December 2004 Rent prepaid amounted to 400.
Calculate the Rent charged to the profit & loss account for the year ended 31st December 2004.
answer
Rent
01/01/04 Prepaid B/d 350 31/12/05 P&L* 1150
31/12/05 Bank 200 31/12/05 prepaid c/d 400 1550 1550
1/01/05 Prepaid B/d 400
01-Jan-05 Prepaid B/d 400
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Re:ACCRUALS & PREPAYMENTS
Thank you for your help with this Zoe0