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pre payments and Accruals

lgarsidelgarside Well-KnownRegistered Posts: 122
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!!!!


  • CJCCJC Font Of All Knowledge Registered Posts: 1,657
    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.
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