>>| Accrual & Prepayment |<<

[PRiYO]

Hellow there my Friend's
I was just looking trough the accrual chapter.. but was just thinking to ask any one.. which part of accrual and prepayments normally examiner tend to be tricky.. or any perticuler area u can suggest to focus .. more..or beware of ... simply any tips or personal observation ??

Love to hear from You guys...

[Acid]

Hellow there my Friend's
I was just looking trough the accrual chapter.. but was just thinking to ask any one.. which part of accrual and prepayments normally examiner tend to be tricky.. or any perticuler area u can suggest to focus .. more..or beware of ... simply any tips or personal observation ??

Love to hear from You guys...

Accrual and prepayment are basic chapters and easy to understand. You should read through the chapter throughly . Accrual can become a small part of any question on income statement etc , statement of financial position etc..

So you should really read and understand the chapter rather then looking for any tips in this area and If you are stuck anywhere then let me know.


Regards,

Assad

[PRiYO]

Thank you Acid

[Vandana]

Hi Priyo,

Are you doing F3? You really need a good grasp of all areas of accruals and prepayments as it comes up (like Acid says) all the time! Ensure that you know how to make a closing prepayment/accrual, but also how to reverse it in the following year.

[PRiYO]

Yes just need to give my exam. revising now. hopefully will pass it soon. will sit for CBE in next 2 weeks.

Thank you

[Shargeel]

During The Period On The January 20x1 Accruals B/d Were = 4327.68during The Period Following Cash Payments Was Made:-

31.1.20x1 Cash 6491.52
30.4.20x1 Cash 5400.93
31.7.20x1 Cash 4700.94
31.10.20x1 Cash 4620.00

Required:

Calculate The Amount Of Accrual C/d

Find The Income Statement Charge For The Period Ended December 20x1.

[Ravinee B]

Hi
Please can anyone give me the double entry of prepayment and accruals and a sample of the T Accounts please
Regards
Ravinee
thanks hope to hear from u soon

[Vandana]

Hi Ravinee,

this is all explained in the F3 study text and student notes. It is also in the keynotes

Vandana

[Ravinee B]

HI Vandana
well can u help me to do the question of shargeel please.I want to check the answer which i did please.
Regards
Ravinee

[Tammi]

Hi, Ravinee B,

Post here your answer and workings of Shargeel's question

[Ravinee B]

Hi, Ravinee B,

Post here your answer and workings of Shargeel's question

well we do
working
bal b/d is 4327 and all cash payments is 21213.39 thus the difference between the is 16886.39 then this is the bal c/d of accruals

[Tammi]

I don't know the answer, I just calculated it myself.

From the question I found out that the company pays its bills or whatever in January, April, July, October, so that's why it had two months' accrual. now, my workings:
Debit side:
Cash 6,491.52
Cash 5,400.93
Cash 4,700.94
Cash 4,620.00
c/d 3,080 (W1)
24,293.39

Credit side:
b/d 4327.68
IS 19,965.71
24,293.39

W1. the figure of the last 2 months (November, December) was not given in the question. In such questions you should think that the figure remained the same as it was in the previous months. So for the last months the bills remained 4,620.00, but you should caclulate only for 2 months and this stands for 3 months:
4,620.00 x 2/3 = 3,080

Hence the answers are:
1. Accrual b/f - 3,080
2. Income statement charge - 19,965.71

Hope this will help

[yokeyin]

HI Shargeel,

I tried the question but not sure my answer is correct. Here is my workings.

The accounting period is 1st Jan 20X1 till 31st Dec 20X1.


31.1.20x1 - for the period ( Feb - Apr) = 6491.52
30.4.20x1 - for the period ( May - July) = 5400.93
31.7.20x1 - for the period (Aug - Oct) = 4700.94
31.10.20x1 - for the period (Nov - Jan) = 4620.00 x 2/3 = 3080

Total amount show in Income statement = RM19673.39
Total amount show in Balance Sheet = 4620 x 1/3 = RM1540

Anyone can correct me if I'm wrong?

Cheers...

[Tammi]

Hi, yokeyin,

Why have you done these calculations:
4620 x 1/3 = RM1540

I think that it was accrual and not prepayment, if it were prepayment then your working would be correct.

The question states that the company has not paid for the last 2 months and it will pay it in January, so it can not be prepayment. And the question is also:
Calculate The Amount Of Accrual C/d.

[adgunny]

Hi, I agree with you tammi, the accrual c/d is $3,080.
but i think the amount in the income statement should be $18425.71
(19,965.71 -1540) as 1540 is the prepayment at end.Please let me know if im right or wrong.
thnx.:swoon:

[Acid]

Hi

If prepayment is at the year-end then right you are right to subtract it.

Regards

[Tammi]

Hi,
There was no prepayment! :nah: