FAPS Lesson 3 - Plenary

Which one of the following is an asset?

• Bank overdraft

• Trade payables

• Income accrued

• Wages accrued

A partnership's statement of financial position at 31 March 20X4 showed an accrual of £106 for heat and light. In the statement of financial position at 31 March 20X3 the accrual for heat and light was £92. If the partnership paid £1,560 for heat and light during the year ended 31/03/X4, the figure for heat and light in the statement of profit or loss will be £

• £1560

• £1574

• £1362

• £1546

A partnership which prepares accounts to 31 December annually paid water rates of £1,200 on 1 May 20X3 for the year ended 31 March 20X4. The adjustment required to the water rates account at 31 December 20X3 is to credit the account with £300.

• True

• False

Answer explanation

As the water rates have been paid up to 31 March 20X4, there are 3 months prepaid at 31 December 20X3. The amount of the prepayment is 3/12 * £1,200 = £300, and this should be credited to the account.

A partnership prepares accounts to 31 December annually. On 31 July 20X2, an accrual was made for heating and lighting of £650. In the year ended 31 July 20X3, the partnership paid a total of £7,150 for heating and lighting, but on 31 July 20X3 an estimated amount of £220 was still outstanding. What figure will be transferred to the statement of profit or loss for the year ended 31 July 20X3?

• £6,720

• £6,280

• £8,020

• £7,580

Answer explanation

£7,150 - £650 + £220 = £6,720. The payment of £7,150 must be reduced by £650, which relates to an expense for the previous year, but must be increased by £220 in respect of the heating and lighting estimated expense, but not yet paid for during this current year.

A partnership needs to accrue for commission received of £850 within their year-end accounts for 31 March 20X8, the journal to adjust for the accrual would be ​ (a)   commission received, ​ (b)   accrued income.

• credit
• debit

Income for accounting purposes is recognised at the point of time when it is ​ (a)   rather than when the money is received.

Expenses for accounting purposes is recognised at the point of time when they are ​ (b)   rather than when the money is paid.

• earned
• incurred
• given
• taken