Can anyone help pls?

Omer AYDINLI

This is an extract from AAT`s website,
I know how to calculate about accruals and prepayments but on that question they both together.
Can anyone state theirs detailed answer pls.
Lots of thanks.
Omer

DG Ltd has prepared its income statement and statement of financial position for the year ended 31 December 20X1. One of its expenses is for insurance, and the income statement shows a figure of £5,300. At 1 January 20X1 there was an opening accrual of £550 for insurance, whilst at 31 December 20X1 the statement of financial position includes in other receivables a prepayment for insurance of £740. From the data given, calculate the actual payment for insurance during the year ended 31 December 20x1.
op1. 4,010
op2. 6,590
op3. 5,110
op4. 5,300

amyjayne27

Hi Omar, I may be completely wrong and please someone correct me if I am but I calculate it as 6590. You take the 5300 and opening accruals are always added so you add the 550, then closing prepayments are also added so you add 740.

I think you actually know the answer you are just not used to them both being together in a question. So you know with accruals you add the opening accruals from the figure in the income statement and take away the closing accrual, and with prepayments it's the opposite so you take away the opening prepayment and add the closing prepayment. So in the question above you are adding the opening accrual and the closing prepayment.

Hope this helps!

Louise89

Hi Omar,

If you know how to calculate Accruals & Prepayments, then my advice is to draw out your T accounts so you can physically see whats happening and what goes where...

Amy - with this and the cash management you're on the ball today!

amyjayne27

Haha thank you Louise I hope so, I have my cash management tommorow so fingers crossed my brain lasts until then :-)

Louise89

Ah I did CMGT yesterday, so chuffed actually, I got "exceeded" on all but 2 questions which I got "met".

Good luck, but I'm sure you don't need it! x

amyjayne27

Ah really what was it like? Just want it to be over now to be honest! Any surprises in there? Well done for passing! :-)

Louise89

I found it relatively easy, there was a curveball in section one but similar to the practice CBT2 which I didn't have time to do, but you should be okay.

One thing I will say is, as my tutor advised us, you need to build up your finger stamina as its a calculator heavy exam! hehe

Have you started level 4? I've got BTX next Tuesday which I'm not overly confident in.

amyjayne27

No haven't started level 4, after cash management I still have to do indirect tax, professional ethics and spreadsheets. Aiming to get it all done by June so I can get started on level 4! Good luck for your next exam, sure you will do fine :-)

Louise89

Ah, thank you Good luck with the rest of level 3! You've got nice exams left x

amyjayne27

Yeah hopefully I have got the horrible ones out of the way! Thanks for your advice x

Omer AYDINLI

Thanks both of you.

At first, I was not sure, later I did exactly same as your explenation and it was correct.
24th Feb. assessment for cash management, good luck for me.
Anyway, thanks a lot.

Omer