prepaid income/accrued income

sscorssscors Feels At HomeRegistered Posts: 72
Hi

does anyone know why prepaid income reduces the income in the current financial year and accrued income increases the income in the current financial year?

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  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    sscors wrote: »
    Hi

    does anyone know why prepaid income reduces the income in the current financial year and accrued income increases the income in the current financial year?

    If you have £10k of income in the current year and £2k if for work you will do in the following year, you'll prepay £2k of income to the following year, thus reducing current income to £8k

    Its the opposite with accrued income, you're recognising income due, but not yet recieved.
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