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ACT 110 Is EASY POP!

Our Confession. ACT 110 Is EASY POP!. Because, These Light Afflictions cannot be compared with the Glory that will be revealed in US!. Question 7. Accruals and Prepayments Exercise. Accruals & Prepayments. Review

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ACT 110 Is EASY POP!

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  1. Our Confession ACT 110 Is EASY POP! Because, These Light Afflictions cannot be compared with the Glory that will be revealed in US!

  2. Question 7 Accruals and PrepaymentsExercise

  3. Accruals & Prepayments Review • Accrual Concept - Revenue and Expenses are accrued, that is recognizedas they are earned or incurred (and not as money is received or paid),... • Accrual Expenses - An expense that the firm has used, but which has not yet been paid for. • Prepaid Expenses - An expense to be used up in a following period, but which has been paid for in advance. • Accruals and prepayments are determined at the end of the financial period under review.

  4. Accruals & Prepayments How to Determine Accruals and Prepayments • Determine when expense is DUE • Determine when expense is PAID • If expense is: • Paid After it is Due – Accrual • Paid Before it is Due - Prepayment

  5. Accruals & Prepayments Opening and Closing Prepaid Expenses • MODEL Expense Account Jan 1 Prepaid Bal c/d 00,000 Jan 1 Accrued Bal c/d 00,000 00,000 Payments Dec 31 Profit and Loss A/c 00,000 Dec 31 Prepaid Bal. (c/d) 00,000 Accrued Bal c/d 00,000 Dec 31 000,000 000,000

  6. Accruals & Prepayments Gray is in business as a printer. His year-end is 31st December. Among his expenses payments are:- Advertising 21.12.87 Advert in local paper to appear 12.1.88 $56 14.1.88 Advert in journal issue dated Nov 1987 $122 13.6.88 Advert in local paper to appear 4.7.88 $845 11.8.88 Advert in local paper free paper June edition $66 5.9.88 Advert in journal to appear in October issue $127 13.12.88 Advert in journal to appear in December, January and February editions$120 12.1.89 Advert in local paper of 23.12.88 $99 PAID DUE

  7. Accruals & Prepayments Advertisement Account 122 Jan 1 Balance b/d 56 Jan 1 Balance b/d 122 Jan 14 Cash Dec 31 Profit & Loss 1,233 Cash 845 June 13 66 Aug 11 Cash Dec 31 Balance c/d 80 Sept 5 Cash 127 Dec 13 Cash 120 Dec 31 Balance c/d 99 1,435 1,435 Jan 1 Jan 1 Balance b/d 80 Balance b/d 99 Jan 12 Cash 99

  8. Accruals & Prepayments PAID DUE Subscriptions • 22.12.87 to “the new stationer” for 1988 $24 • 24.1.88 to the Chamber of Commerce for 1988 $60 • 12.2.88 to his Rotary Club $75 • 4.5.88 to “Stationery Now” for the 12 monthly issues beginning June 1988 $36 • 5.10.88 to National Stationers Society for 1988 $71 • 7.12.88 to “the new stationer” for 1989 $28 • 3.1.89 to the Midland Small business club for the year ending 31st October 1989 $108

  9. Accruals & Prepayments Subscription Account Jan 1 Balance b/d 24 60 Jan 24 Cash Dec 31 Profit & Loss 269 Cash 75 Feb 12 36 May 4 Cash Dec 31 Balance c/d 43 Oct 5 Cash 71 Dec 7 Cash 28 Dec 31 Balance c/d 18 312 312 Jan 1 Jan 1 Balance b/d 43 Balance b/d 18

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