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WorksheetsAccrual and Prepayment
Total questions: 27
Worksheet time: 14mins
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
What is the difference between income receivable and income received in advance? (tick 2 boxes)
income receivable = posted as current asset
income received in advance = posted as current liability
income receivable = not yet received for current year
income received in advance = received in advance for next year
income receivable = received for current year
income received in advance = not received in advance for next year
income receivable = posted as current liability
income received in advance = posted as current asset
What are 2 accounting concepts applied to prepayments and accruals?
prudence and accrual concepts
prudence and matching concepts
accounting entity and going concern concepts
matching and accrual concepts
Additional information at year end:
accrued insurance $300 prepaid rent $700
Identify the correct entries in Income statement .
add $300 accrued insurance minus $700 prepaid rent
add $300 accrued insurance add $700 prepaid rent
minus $300 accrued insurance minus $700 prepaid rent
minus $300 accrued insurance add $700 prepaid rent
Additional information at year end:
interest income receivable $500
Rent income received in advance $200
add Rent income received in advance $200
less interest income receivable $500
add Rent income received in advance $200
add interest income receivable $500
less Rent income received in advance $200
add interest income receivable $500
less Rent income received in advance $200
less interest income receivable $500
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
Selling expenses, $700, is prepaid
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
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
In which section of the statement of financial position would you find accrued commission received?
Non-Current Assets
Current Assets
Equity
Non-Current Liabilities
Current Liabilities
In which section of the statement of financial position would you find accrued advertising?
Non-Current Assets
Current Assets
Equity
Non-Current Liabilities
Current Liabilities
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
When prepaid rent of $300 was not being adjusted as at year end. What is the effect on profit for the year?
No change (constant)
Overstated by $300
Understated by$300
Wages expense paid for 2017 amounts to $20000. Annual wages expense is $16000. State the adjustment to be made.
Prepaid wages $4000
Accrued wages $4000
Prepaid wages $16000
Accrued wages $16000
Commission income received for 2017 amounts to $8000. Annual commission income is $5000. State the adjustment to be made.
Commission receivable $3000
Unearned commission $3000
Commission receivable $5000
Unearned commission $5000
Anjum rents part of her premises to Ajay for $6120 per annum. At the beginning of the year Ajay had paid two months rent in advance. At the end of the year Ajay had paid three months rent in advance.
How much rent was received from Ajay during the year?
$3570
$5610
$6630
$8670
What is unearned 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 accrued expense?
Amount paid but not earned yet
Amount paid but not incurred yet
Amount not paid but incurred
Amount not paid but earned
An example is utilities used in December 2018 but which has not been paid in December 2018 must be recorded in the Income Statement for the period ended 2018. This is an application of ___ concept.
Accrual
Matching
Accounting period
Objectivity
