Accrulals/pre-payments

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:30AM in AAT student discussion
Hi Can anyone help when calculating expenses with accounts that have accruals and pr-payments from the previous year - i always put the figure the wrong way. Does anyone have a way of remembering?<BR><BR>Cheers Michelle - Harrogate

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Accrulals/pre-payments

    Yeah sure. When you pre-pay something it is an asset. <BR><BR>For example your car tax, you pay 6 or 12 months in advance. So in Jan you still have another 5 months of tax left before you have to update it.<BR><BR>If you remember that then all you have to remember is that accruals are the opposite.<BR><BR>Hope this has helped!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Accrulals/pre-payments

    Errrm<BR><BR>Where there is an opening prepayment you ADD this on to the relevant expense account for the year.<BR>The closing prepayment you DEDUCT.<BR><BR>Therefore it is the opposite for an Accural<BR><BR>Where there is an opening accrual you DEDUCT this from the relevant expense account for the year.<BR>The closing accruals are ADDED.<BR><BR>I think this is what you were asking<BR>Good Luck<BR>Andy <img src="i/expressions/face-icon-small-smile.gif" border="0">
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Accrulals/pre-payments

    I still can't work these out without drawing T accounts, we learnt them that way and its just sort of stuck<BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Accrulals/pre-payments

    Thanks Andy that was what i was refering to <BR>Cheers Mich<BR>

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