Expense and Income Ledger Accounts

Expenses are recognised in

the year that the expense is incurred, irrespective of when payment occurs.

Bal b/d accrued:

An expense incurred last year but paid this year (within the said figure) and so reduces the expense for this year.

Bal c/d accrued:

An expense incurred this year but will be paid next year and so increases the expense for this year.

IS figure =

bank + bal c/d - bal b/d

For any expense account, the paid amount will be on

Dr side and the IS figure will be on the Cr side.

Bal b/d and Bal c/d will be the opposite way around depending on whether

it is prepaid or accrued.

For any income account, the received will be on

Cr side and the IS figure will be on the Dr side.

Where the bal b/d and bal c/d are both either prepaid or accrued then they will be in

the opposite sides of the ledger account

Where the bal b/d and bal c/d are one of each - one prepaid and one accrued -

they will be on the same side of the ledger account