Prepayments and Accruals

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:31AM in AAT student discussion
Hi, can anybody help me remember how to work out accruals and prepayments? I'm fine with the double entry and what they actually are. I'm just finding it quite confusing how to work them both out. Is there a formula or a standard way to work out amounts prepaid/accrued over a financial year? Any help would be greatly appreciated!

Thanks
Katie

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Prepayments and Accruals

    Hi Katie.

    You just need to look at how many months they relate to.

    If rent is £3,000 per annum, and there is a prepayment of 7 months:

    £3,000 / 12 = £250 per month

    £250 * 7 months = £1,750 prepayment

    Scott.

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