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Flashcards in Acrued And Prepaid Deck (22)
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1

How to deal with Accrued Expenses?

Dr Expense account
Cr Accruals

2

How to deal with Accrued Income?

Cr Income account
Dr Accrual

3

How to deal with Prepaid Expenses?

Cr Expense
Dr Prepayments

4

How to deal with Prepaid Income?

Dr Income account
Cr Prepayments

5

How do Prepaid Income affect income and profit in the current period?

Reduces income in current period

Reduces profit in the current SPL
(Dr Income account)

Record in SFP as a liability

6

How do Prepaid Expenses affect income and profit in the current period?

Reduces expenses in current period

Increases profit in current period
(Cr expenses account)

Record in SFP (statement of financial position) as an asset

7

How do Accrued Income affect income and profit in the current period?

Increases income in current period

Increases profit in current period
(Cr Income account)

Record in SFP as an asset

8

How do Accrued Expenses affect income and profit in the current period?

Increases expenses in current period

Reduces profit in current period
(Dr Expenses account)

Record in SFP as a liability

9

Is Allowance for doubtful debts a debit or a credit?

It is a liability do it will be a credit on the SFP

10

Is the "Allowance for Doubtful Debts: Adjustments" a credit or a debit?

It is an expense account so it will be a debit on the SPL.

11

Which accounts start a new financial year from zero?

SPL accounts i.e. Income and expenditure accounts.

12

Which accounts start a new financial year from with the closing balance of the previous year?

SFP accounts i.e. Assets, Liabilities and Capital.

13

The Profit calculated from the Extended Trial Balance will be the same as...

The one calculated from the SPL

14

The SFP Net assets amount should be the same as...

The closing Capital figure.

15

Determine which type of account is Carriage in?

This is shown as a Cost Of Sales in the SPL.

16

Where will Carriage Out be recorded?

It appears in the SPL as an expense.

17

Which are the only type of discounts that appear on the financial accounts?

Prompt Payment Discounts

18

When are Discounts allowed calculated on the SPL?

Only after the Gross Profit is calculated since it it shown as income (negative expense).

19

What are accruals?

Amounts which are due but are still unpaid.

20

What are Prepayments?

Amounts that have been paid but that weren't due yet.

21

What is the procedure when an accrual or prepayment are from a previous accounting period?

Whichever effect they had in that period should be reversed for the current period.

22

How can we find the amount to be transferred to the SPL at year-end from accruals and Prepayments?

Balance out the expense or income account and find out the missing info i.e. SPL amount minus balances b/d (accruals from last period) and c/d (Prepayments into next period).