Accruals & Prepayment

On 1 May 20X0, A commenced business and paid an annual rent charge of $1,800 for the period to 30 April 20X1. What is the charge to the statement of profit or loss and the entry in the statement of financial position for the accounting period ended 30 November 20X0?

• $1,050 charge to statement of profit or loss and accrual of $750 in the statement of financial position.
• $1,050 charge to statement of profit or loss and prepayment of $750 in the statement of financial position.
• $1,800 charge to statement of profit or loss and no entry in the statement of financial position.
• $750 charge to statement of profit or loss and prepayment of $1,050 in the statement of financial position.

A rent prepayment of $960 was treated as an accrual in a sole trader’s statement of profit or loss atthe year end. As a result, the profit was:

• understated by $960
• understated by $1,920
• overstated by $1,920
• overstated by $960

The following transactions relate to Rashid's electricity expense ledger account for the year ended 30 June 20X9: Prepayment brought forward $550; Cash paid $5400; Accrual carried forward $650. What amount should be charged to the statement of profit or loss in the year ended 30 June 20X9 for electricity?

• $6,600
• $5,400
• $5,500
• $5,300

A trader did not keep full accounting records. The following information was available for 2015. trade payables on 1 January: $32785 trade payables on 31 December: $43630 payments to suppliers during the year : $72830 discounts received during the year: $3450 What was the value of purchases?

• $58,535
• $65,435
• $80,225
• $87,125

Why does a trader account for accrued income?

• so that current liabilities are not overstated
• so that current liabilities are not understated
• so that profit is not understated
• so that profit is not overstated

A trader sends his staff on a training course costing $100 per person. 10 staff attended in April and 4 in May. Half the total cost had to be paid at the start of April and the balance at the end of May. Which entry for training was made in the statement of financial position on 30 April?

• $300 accrual
• $400 accrual
• $600 prepayment
• $700 prepayment

A business paid $10 000 for motor expenses in the year. The opening prepayment was $1500 and the closing accrual was $2000. What was the charge for motor expenses for the year?

• $6,500
• $9,500
• $10,500
• $13,500

At 1 January 2014 a business had prepaid rent of $700. In July it paid an invoice for $9300 and on 31 December it transferred an expense of $9000 to the income statement. Which value appeared in the statement of financial position at 31 December 2014?

• $400 other payables
• $1000 other receivables
• $1000 other payables
• $400 other receivables

On 1 January 20X5, Willy Mossop owed $2,000 in respect of the previous year electricity. Willy made the following payments during the year ended 31 December 20X5: 6 February $2,800 8 May $3,000 5 August $2,750 10 November $3,100 At 31 December 20X5, Willy calculated that he owed $1,800 in respect of electricity for the last part of the year. What is the electricity charge to the income statement?

• $1,800
• $11,450
• $11,650
• $13,450

Sybil’s financial year ended on 30 November 20X2. She incurs the same telephone expense each month. The last invoice paid for telephone calls was $1,800. This invoice covered the three months to 31 October 20X2. What adjustment is required when preparing the accounts for the year to 30 November 20X2?

• A prepayment of $600
• A prepayment of $1,200
• An accrual of $600
• An accrual of $1,200