![](\"https:\/\/blogger.googleusercontent.com\/img\/a\/AVvXsEiwJ84AKLDDIKB9BZKN9zrSLGylbffs8o8uOhsdFK9Z-Ixq8xZIpFAoBogjbPPcoRYR5RN-y4bPTyeUxaLSKyV2GaHJO-69BIO9d4w94QGTeK942AZVVhgweifFXP2AYXPt24wGVUsf0TQ6O_ntWUgU5KpevmgyZbfNZSzcIIZKmZm-HvqPCuxiwAFw=w609-h112\")
<\/a><\/div>\nIn accounting for accruals, the effect that needs to occur will be to increase the <\/p>\n <\/p>\n Example:<\/span><\/b><\/p>\n You are working on the accounting records of a business for the year ended 31 \u00a3980<\/span><\/p>\n<\/td>\n<\/tr>\n \u00a0\u00a0 <\/span>\u00a31,054<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span>Calculate the value of the adjustment required for the business rates account as at 31 January 20X7 and show the journal entry needed for the relevant adjustment.<\/span><\/p>\n Solution:<\/span><\/b><\/p>\n \u00a0<\/span><\/p>\n<\/td>\n Accruals<\/span><\/p>\n<\/td>\n<\/tr>\n \u00a3980<\/span><\/p>\n<\/td>\n \u00a3980\/8×4= \u00a3490<\/span><\/p>\n<\/td>\n<\/tr>\n \u00a0\u00a0 <\/span>\u00a31,054<\/span><\/p>\n<\/td>\n \u00a31054\/11×1=95<\/span><\/p>\n<\/td>\n<\/tr>\n \u00a0<\/span><\/p>\n<\/td>\n \u00a3490+\u00a395=\u00a3585<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span><\/p>\n Account name<\/span><\/p>\n<\/td>\n Amount Dr\/ Business rates<\/span><\/p>\n<\/td>\n 585<\/span><\/p>\n<\/td>\n Dr<\/span><\/p>\n<\/td>\n<\/tr>\n Accruals<\/span><\/p>\n<\/td>\n 585<\/span><\/p>\n<\/td>\n Cr<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
\n<\/span>An accrual is an amount outstanding for payment by the end of an accounting
\nperiod, so has not been entered into the ledger accounts.<\/span><\/p>\n
\nrelevant expenditure in an attempt to account for the outstanding transactions
\nwhich may not have been paid for and then to increase the liability in that
\naccounting period, recognising that the business owes that amount.<\/span><\/p>\n![](\"https:\/\/blogger.googleusercontent.com\/img\/a\/AVvXsEjG3dJISSxXzXxGjylEGWe27MAqB-m4pfUuRfXpALQUT3tTCfd94gB36zuGayFtvo1GiPjKWpe71ngYScX7aLyKEYssLegjLYXMjPaPHxb3idmCgoYgydxT_qkbPACkoRtUJK6IC_4dw6tqozDvAF1iaz3iSeiAGDgVpeqVr1ScnSDOgJxBaP9SWc2g=w622-h117\")
\nJanuary 20X7. You are looking at the business rates expense for the year and
\nthis shows payments for the following periods:<\/span>\u00a0<\/span><\/p>\n\n\n
\n February
\n20X6 \u2013 September 20X6- Office 1<\/span><\/td>\n\n \n February
\n20X6 \u2013 December 20X6- Office 2<\/span><\/td>\n\n \n\n
\n \u00a0<\/span><\/td>\n \n \n \n February
\n20X6 \u2013 September 20X6- Office 1<\/span><\/td>\n\n \n \n February
\n20X6 \u2013 December 20X6- Office 2<\/span><\/td>\n\n \n \n Total
\naccruals adjustment needed<\/span><\/td>\n\n \n \n\n
\n \n \n
\n(\u00a3)<\/span><\/p>\n<\/td>\n\n
\nCr<\/span><\/p>\n<\/td>\n<\/tr>\n\n \n \n \n \n \n \n \n