Pop quiz Accruals & Prepayment

An accrual is an expense charged against profit for a period, even though it has not yet been paid or invoice.

• True

• False

If a business has paid rent of $1000 for the year to 31 March 20X9, what is the prepayment in the account for the year to 31 December 20X8?

• $300

• $250

• $167

• $333

Which of the following statements is false?

• Accruals decrease profit

• Accrued income decreases profit

• A prepayment is an asset

• An accrual is a liability

An application of matching concept is charging an electricity bill not paid the year end in the income statement of the following year.

• True

• False

• SOPL $11,000 SOFP Accrual $9000 (CR)

• SOPL $11,100 SOFP Prepayment $9000 (DR)

• SOPL $11,700 SOFP Prepayment $9000 (DR)

• SOPL $11,100 SOFP Accrual $9000 (CR)

• Expense $25000 Prepayment $10000

• Expense $19000 Prepayment $5000

• Expense $20000 Prepayment $5500

• Expense $20000 Prepayment $5000

• SOPL $27500 SOFP $5000 in receivables

• SOPL $27000 SOFP $2500 in receivables

• SOPL $27000 SOFP $2500 in payables

• SOPL $27500 SOFP $5000 in payables