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

The revenue recognition principle dictates that revenue should be recognized in the accounting records:

• when cash is received.

• when it is earned.

• at the end of the month.

• in the period that income taxes are paid.

Failed to pay $1000 of rent this year

• Prepaid expenses

• Accrued expenses

• Prepaid income

• Accrued income

The payment for electricity includes $500 relating to the following year

• Prepaid expenses

• Accrued expenses

• Prepaid income

• Accrued income

A business receive interest from an investment, but is owed interest of $200 this year

• Prepaid expenses

• Accrued expenses

• Prepaid income

• Accrued income

What is accrued expense?

• Business has incurred expense, but has not paid (still owe).

• Business has not incurred expense, but has paid.

What is income received in advance?

• Business has earned the income, but has not received the money.

• Business has not earned the income, but has received the money.

What is income receivable/ accrued income?

• Business has earned the income, but has not received the money.

• Business has not earned the income, but has received the money.

On 1 June 2017, a cheque of $33,000 was paid for 10 months from 1 June 2017 to 31 March 2018. 2 months of rent was outstanding.

What is the account and amount to be recorded in the statement of financial position as at 31 May 2018?

• $3300 accrued rental expense

• $3300 prepaid rental expense

• $6600 accrued rental expense

• $6600 prepaid rental expense

Prepaid rent is recorded as ____ in the Balance Sheet.

• Current assets

• Current liabilities