Good morning guys

I was wondering if someone could help me, I am going to book my ACPR exam but finding this very difficult to get my head around (some sections) especially accruals and prepayments.
I think the thing I am most confused is about which side things sit on as I know the below:

Asset Liability
Prepaid Expense Prepaid Income
Accrued Income Accrued expense

so this is what I know, not sure if its right.
On (for example) the electricity account if there is a an accrued expense this will go on the debit side of the electricity account and the accrual on the credit side of the accrual account.
Does this then balance of the SOPL?

Also this is where I am really stuck, for the next financial year, that accurual, if this is brought down into the next financial year will this show as a credit on the expense account? Have I got that right?

Any help would be much appreciated.

thank you



  • stevef
    stevef Registered Posts: 258 Dedicated contributor 🦉
    Yes you have got it right.

    Try to think what you are trying to do. In your example, you have reached the end of the accounting period, but you know that electricity has been consumed that you have not yet been charged. So you want to increase the electricity expense ie debit electricity account, completing the double entry, credit accrual account.

    In the next accounting period, you will be paying for electricity that you have already accounted for. So you credit the electricity account so that when you actually pay the bill there is a credit waiting to offset the payment against. The other side of the double entry is the debit the accrual account leaving a nil balance in accruals.
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