FRA - past exam question

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Hi<BR><BR>wondering if somebody can clear up my confusion.<BR><BR>I have just run through the first section of the FRA exam from Dec 2003. Task 1.6 part (b):<BR>Calculate the adjusted admin expenses for the y/e 31 Oct 2003<BR><BR>My answer:<BR>Admin exp (given in bank a/c summary) = £9,340<BR>Rent prepayment = (£2,200)<BR>Answer = £7,140<BR><BR>Correct answer:<BR>Admin exp = £9,340<BR>Rent = £3,300<BR>Rent prepayment = (£2,200)<BR>Answer = £10,140<BR><BR>It states that rent is included in the administration expense but in the answer given it is adding it on? Can someone please explain why.<BR><BR>Thanks<BR>Kelly

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    FRA - past exam question

    Hi Kelly<BR><BR>Your current admin expenses are £9340<BR>your pre payment for current year is (2,200)<BR>In 2002 you would have account for a prepayment that would reduce the admin expenses as at that point in time it did not relate that that accounting period. <BR><BR>Hit the the revenue year that expenses has become due so that is why you add back in to the admin expenses account, in the real world this would be by means of a reversing journal, which is why you add the £3300, which would = £10,140.00<BR><BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    FRA - past exam question

    Thanks petrol monkey, that has cleared it up.<BR><BR>Kelly
  • System
    System Posts: 100,534 🤖 Admin 🤖
    FRA - past exam question

    No worries!!

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