accruals

shellsbook
shellsbook Registered Posts: 12
in AAT Level 4 (Level 8 in Scotland)
Hi

Can anyone confirm what you'd do in the following real life situation:

order is placed for some handmade goods in Feb. No money is taken. Goods are made in April. Money is sent in May. Goods despatched May.

So should this be an accrual - taken as when the order is placed?

thanks,

Shell

Comments

  • Clintm15
    Clintm15 Registered Posts: 248 Dedicated contributor 🦉
    edited November 2014
    Whether it is an accrual or not very much depends on when the year end is. In real life situations we would normally work from the invoice date.
    AAT
    Level 2 - 2011
    Level 3 - 2012
    Level 4 - 2013

    ACCA
    F4 - Corporate Law - Dec 2015 (passed)
    F5 - Performance Management - Dec 2014 (passed)
    F6 - Taxation - Dec 2013 (passed)
    F7 - Financial Reporting - Jun 2014 (passed)
    F8 - Audit & Assurance - Dec 2015 (passed)
    F9 - Financial Management - Jun 2015 (passed)
  • stevef
    stevef Registered Posts: 258 Dedicated contributor 🦉
    The important date is the date the goods are received, the date you take ownership and accept risk. But if that date can not be ascertained for any reason, invoice date makes a reasonable proxy.
  • shellsbook
    shellsbook Registered Posts: 12
    Thanks both. That's what I thought but I wasn't sure.

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