Accruals/Prepayments
jewels.p
Font Of All KnowledgeRegistered Posts: 1,774
Hi all,
I am getting confused!:confused1:
I am trying to do a P & L Account for the year ending 2004 and have the following figures.
At the end of the financial year 2003 there is prepaid general expenses of £700
At the end of the financial year 2004 there is an accrual for general expenses of £210
The amount for general expenses paid for the year is £8110
Am I right in adding both the 700 and the 210 to the £8110 to get the final figure?
Not sure now! Usually prepayments are deducted and accruals are added aren't they?:001_unsure:
Thanks
I am getting confused!:confused1:
I am trying to do a P & L Account for the year ending 2004 and have the following figures.
At the end of the financial year 2003 there is prepaid general expenses of £700
At the end of the financial year 2004 there is an accrual for general expenses of £210
The amount for general expenses paid for the year is £8110
Am I right in adding both the 700 and the 210 to the £8110 to get the final figure?
Not sure now! Usually prepayments are deducted and accruals are added aren't they?:001_unsure:
Thanks
0
Comments
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im not sure but i would of thought the prepayment would have been dealt with in the 2003 profit and loss??
and the 2004 is the accrual figure should be used for 2004??0 -
Hello,
You are correct to add both the £700 and £210 for the expense account, this is becuase for the accounts y/e 2004 you are reversing the prepayment created in y/e 2003 ie:
Dr Gen Expenses £ 700
Cr Prepayments £ 700
Being prepayment reversal Y/e 2003
And to create the accrual for 2004 would:
Dr Gen Expenses £ 210
Cr Accruals £ 210
Being Gen. Expenses Accrual Y/e 2004
Basically, you had it right :001_smile:0 -
ill have to remember that...not got that far on my course yet
:001_smile:0 -
Hello,
You are correct to add both the £700 and £210 for the expense account, this is becuase for the accounts y/e 2004 you are reversing the prepayment created in y/e 2003 ie:
Dr Gen Expenses £ 700
Cr Prepayments £ 700
Being prepayment reversal Y/e 2003
And to create the accrual for 2004 would:
Dr Gen Expenses £ 210
Cr Accruals £ 210
Being Gen. Expenses Accrual Y/e 2004
Basically, you had it right :001_smile:
Thanks. Will have to watch out for that in the Exam as in the work I've done so far it has been a case of adding one and deducting the other.
Think thats why I was unsure if I was correct or not.:001_smile:0 -
