A basic test on prepayments: You are working on the accounting records of a business for the year ended 31 March 20X7. You are looking at the rent expense for the year and this includes payments for the following periods:  Apr 20X6 – May 20X7- Office 1 £5,040 Apr 20X6 – Jan 20X7- Office 2 … Read More

A basic test on accruals:  You are working on the accounting records of a business for the year ended 31 March 20X7. You are looking at the rent expense for the year and this includes payments for the following periods: Apr 20X6 – May 20X7- Office 1 £5,040 Apr 20X6 – Jan 20X7- Office 2 … Read More

  Prepaid income is an amount received in advance for a sundry income which relates to an accounting period after the year end. In accounting for prepaid income, the effect that needs to occur will be to reduce the overpayment in income in an attempt to account for only the income earned in that accounting … Read More

Accrued income is a sundry income amount outstanding and yet to be received by the end of an accounting period, so has not been entered into the ledger accounts. In accounting for accrued income, the effect that needs to occur will be to increase the relevant income in an attempt to account for the total … Read More

  A prepayment is an amount paid in advance for an expense which relates to an accounting period after the year end. In accounting for prepayments, the effect that needs to occur will be to reduce the relevant expenditure in an attempt to account for the transactions which have been overpaid and then to increase … Read More

  An accrual is an amount outstanding for payment by the end of an accounting period, so has not been entered into the ledger accounts. In accounting for accruals, the effect that needs to occur will be to increase the relevant expenditure in an attempt to account for the outstanding transactions which may not have … Read More

Below is a handy chart on accounting adjustments: prepaid expenses, prepaid income, accrued expenses and accrued income. Knowing what to debit and what to credit for each will come in handy in your exams. Accruals and Prepayments – YouTube

WHAT IS THE EMPLOYMENT STATUS OF SANTA’S HELPERS? Elf-employed! WHY DID SANTA HAVE TO FIT BOOSTER SEATS AND SEAT BELTS ON HIS SLEIGH? Its because of elf and safety! It is our sincere hope that you get a pleasant visit from Santa J. We hope and trust you have a nice and pleasurable season and … Read More

What is tax evasion? What is tax avoidance? Who is asking? Why? Never mind the answer, it’s all legit!

CLASSIFICATION OF COSTS BY BEHAVIOUR  Classifying costs by behaviour requires you to classify the costs into Variable costs Fixed costs Semi-variable costs Stepped costs Variable costs- these are costs that vary with the level of production or activity. It is usually assumed to vary in direct proportion to production. For example, if you make twice … Read More