pre payments and Accruals
lgarside
Registered Posts: 122 Dedicated contributor 🦉
Hello can someone let me know when doing the above do you just have to do them at year end, or if for example you have a yr end dec 31st and in june you pay a bill for the 1/4 may-july would you have to put some of this to an accruals or do you just apply it to the nom expense and only worry if it goes over the year end?
Also if you pay for things like memberships would you do prepayments for this or is it only utility bills etc??
Hope this makes sense!!!!
Also if you pay for things like memberships would you do prepayments for this or is it only utility bills etc??
Hope this makes sense!!!!
0
Comments
-
The point of accruals/prepayments is to ensure that all expenses relate to the accounting period which they are incurred (this is the matching or accruals concept). We only need to take prepaid or accrued expenses into consideration when the expense crosses accounting period -either an expense we have paid for in advance that won't be incurred until the next period (prepayment) or an expense incurred the current period that won't be paid until the next (accrual).
Which is a long winded way of saying you only need to consider accruals and prepayments at the end year and that it applies to all expenses.0
Categories
- All Categories
- 1.2K Books to buy and sell
- 2.3K General discussion
- 12.5K For AAT students
- 328 NEW! Qualifications 2022
- 161 General Qualifications 2022 discussion
- 11 AAT Level 2 Certificate in Accounting
- 57 AAT Level 3 Diploma in Accounting
- 95 AAT Level 4 Diploma in Professional Accounting
- 8.9K For accounting professionals
- 23 coronavirus (Covid-19)
- 273 VAT
- 92 Software
- 275 Tax
- 138 Bookkeeping
- 7.2K General accounting discussion
- 203 AAT member discussion
- 3.8K For everyone
- 38 AAT news and announcements
- 345 Feedback for AAT
- 2.8K Chat and off-topic discussion
- 584 Job postings
- 16 Who can benefit from AAT?
- 36 Where can AAT take me?
- 42 Getting started with AAT
- 26 Finding an AAT training provider
- 48 Distance learning and other ways to study AAT
- 25 Apprenticeships
- 66 AAT membership