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Sammary of Accrual & Prepayments

The document outlines the accounting entries for prepayments and accruals, detailing the steps for reversing, entering, and closing off these accounts. It emphasizes the importance of transferring balances to the Statement of Profit or Loss and showing remaining balances in the Statement of Financial Position. Additionally, it encourages users to attempt the online FA MCQ test after completing the chapter.

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15 views1 page

Sammary of Accrual & Prepayments

The document outlines the accounting entries for prepayments and accruals, detailing the steps for reversing, entering, and closing off these accounts. It emphasizes the importance of transferring balances to the Statement of Profit or Loss and showing remaining balances in the Statement of Financial Position. Additionally, it encourages users to attempt the online FA MCQ test after completing the chapter.

Uploaded by

africashaven
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Watch free ACCA FA lectures 24

4. Summary of entries
(a) Prepayments
1. Reverse any Prepayments brought forward:
DR Expense Account (e.g. Insurance, Rates)
CR Prepayments Account
2. Enter any payments during the period:
DR Expense Account
CR Cash Account
3. Enter any prepayments at the end of the period:
DR Prepayments Account
CR Expense Account
4. Close-off the accounts:
Transfer the balance on the expense account to the Statement of Profit or Loss.
DR Statement of Profit or Loss t-account
CR Expense Account
Leave the balance on the prepayments account and show in the Statement of Financial
Position.

(b) Accruals
1. Reverse any accruals brought forward:
DR Accruals Account
CR Expense Account (e.g. Telephone, Electricity)
2. Enter any payments during the period:
DR Expense Account
CR Cash Account
3. Enter any accruals at the end of the period:
DR Expense Account
CR Accruals Account
4. Close-off the accounts:
Transfer the balance on the expense account to the Statement of Profit or Loss.
DR Statement of Profit or Loss t-account
CR Expense Account
Leave the balance on the accruals account and show in the Statement of Financial Position.

WHEN YOU FINISHED THIS CHAPTER YOU SHOULD ATTEMPT THE ONLINE FA MCQ TEST

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