Accruals and Prepayments Review Quiz

The _______ concept states that for a given financial period, only the expenses incurred to generate

the income reported during the period should be recorded in the same period.

• Accrual

• Matching

• Accounting period

• Objectivity

The accrual concept states that _____ during a financial period, regardless of _______.

• income and expenses are recorded when they are earned and incurred respectively, when collection is received and

  payment is made.

• assets and liabilities are recorded , when they occurred.

What are 2 accounting concepts applied to prepayments and accruals?

• prudence and accrual concepts

• prudence and matching concepts

• accounting entity and going concern concepts

• matching and accrual concepts

An example is utilities used in December 2018 but which has not been paid in December 2018 must be recorded in the Income Statement for the period ended 2018. This is an application of ___ concept.

• Accrual

• Matching

• Accounting period

• Objectivity

Define the term - prepaid expenses.

• •Money paid in current period for service to be used in the next period.

• •Money paid in next period for service to be used in the next period.

• •Money paid in current period for service for use in the current period.

• •Money paid in next period for service to be used in the current period.

A prepaid expenses is paid

• After the accounting period ends

• Before the accounting period ends

• At the beginning of the accounting period

• As soon as the expense is incurred

What is difference between accrued expenses and prepaid expenses? (tick 2 boxes)

• accrued expenses = not yet paid for the current year

  prepaid expenses = paid in advance for the next accounting period

• accrued expenses = paid for the current year

  prepaid expenses = not paid for next accounting year

• accrued expenses = posted as current asset

  prepaid expenses = posted as current liability

• accrued expenses = posted as current liability

  prepaid expenses = posted as current asset

Prepaid expenses are classified under which section in the Statement of Financial Position?

• Current liabilities

• Current asset

• Non-current liabilities

• Non-current asset

Accrued Income is received

• Before the end of the accounting period

• After the end of the accounting period

• At the start of the accounting period

• At the end of the accounting period

What is the difference between income receivable and income received in advance? (tick 2 boxes)

• income receivable = posted as current asset

  income received in advance = posted as current liability

• income receivable = not yet received for current year

  income received in advance = received in advance for next year

• income receivable = received for current year

  income received in advance = not received in advance for next year

• income receivable = posted as current liability

  income received in advance = posted as current asset