Chapter 11 Accruals and prepayments

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 money measurement concepts

• prudence and matching concepts

• accounting entity and going concern concepts

• matching and accruals concepts

The accruals concept is also known as .......

• The Pairing Concept
• The Matching Concept
• The Meticulous Concept
• The Marvellous Concept

When is income considered earned?

• Income is earned and recorded when goods are sent to the customer or when services have been provided.
• Income is earned and recorded when goods are sent to the customer or when services have been ordered.
• Income is earned and recorded when goods are sent to the customer or when services have been paid.
• Income is earned and recorded when goods are sent to the customer or when services have been returned.

When is expense considered incurred*?

• Expense is incurred and recorded when they are paid.
• Expense is incurred and recorded when benefits have been consumed to generate income and not the date the expense is paid.
• Expense is incurred and recorded when they have been returned.
• Expense is incurred and recorded when they are lost.

What is the meaning of "incurred"?

• you don't have to pay money yet 
• you have no liability to pay
• you have to pay money because of something you have done [liability to pay]
• you don't have to pay money because of something you have not done 

What is prepaid expense?

• Amount paid but not earned yet

• Amount paid but not incurred yet

• Amount not paid but incurred

• Amount not paid but earned

What is accrued expense?

• Amount paid but not earned yet

• Amount paid but not incurred yet

• Amount not paid but incurred

• Amount not paid but earned

What is accrued income?

• Amount received but not earned yet

• Amount received but not incurred yet

• Amount not received but incurred

• Amount not received but earned

What is prepaid income?

• Amount received but not earned yet

• Amount received but not incurred yet

• Amount not received but incurred

• Amount not received but earned