![]() Theadditional accrual would increase our current liabilities by $500.Ī prepayment arises where some of the following year’s expenses have been paid in the current year. The additional telephone expense would reduce profits by $500. Show the ledger accounts required to record the above transactions.Īccrued expenditure will reduce profit in the Income statement andwill also create a current liability on the Statement of financialposition.įor example, if we were to put through an accrual of $500 for telephone expenses. The final payment due on 31 December 20X1 for the quarter to that date was not paid until 4 January 20X2. 2 October (for the quarter to 30 September 20X1) $5,000.29 June (for the quarter to 30 June 20X1) $5,000. ![]()
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