Accruals and Prepayments Flashcards

Flashcards about accruals and prepayments, based on the lecture notes.

Accrual

Income or expenses that have been incurred during the period but are unpaid at the end of the year.

Prepayment

Income or expenses that are paid for in advance of the period they relate to.

Accounting for Accrued Expenses

Debit expense and credit accrued expenses in your liabilities of your statement of financial position.

Accounting for Accrued Income

Debit accrued income and credit your income.

Accounting for Prepayments

Credit the expense and debit the prepayment, which is a current asset.

Accounting for Deferred or Prepaid Income

Debit your income and credit deferred income, which is a liability on the statement of financial position.