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Hi, thank you very much for your lectures. I have difficulties with a question. For example,
Marco at 31.12.2003 had accrued 240$ in respect of gas for the quarter ending 31.12.2003. In January he discovered that he had under-accrued by 10$.
He received bills ( summ of for example 10000$) from 1 of January 2004 till 31.12.2004.What is the charge to the statement of profil and loss? And what should we do with under-accrued expense?
Thank youI do mention this in my lectures!
They will start the year with a credit balance of 240.
They will debit with the bills for the year of 10,000.Therefore the balance on the account and therefore the expense for the year in the SOPL will be 9,760 (assuming that there is no accrual needed at the end of the year).
We do not do anything special with the over-accrual – we cannot go back and change the previous year and so it is effectively corrected for in the current year.
Hi to all ,
I am actually studying my f3 and I could not understand the reversion kit question for accrual and prepayment
Question 10.2 2016-2017
Why the accrual is 10000and not 20000
The rent is paid in advance for February and March so it shout be an accrual of 2 month prepayment that equal 20000There is no point in asking about a question in a revision kit without saying which revision kit it is!! There are several ACCA approved publishers and they all produce revision kits.
thank you so much for replying and sorry about my missing information it is my first time using the ask tutor .
the question is in bpp revision kit 2016- 2017 f3 question 10.2 accruals and prepayment :
Q: A Company pays rent quarterly in arrears on 1 January ,1April ,1July and 1October each year .the rent was increased from 90000 $ per year to 120 000$ per year as from 1 October 20X2.
-what rent expense and accrual in the financial statement for the year ended 31 January 20X3.-my answer is 100 .000$ rent expense and 20.000$ accruals (as the rent is paid for Feb and March in advance on 1Jan the year ended 31Jan 20X2 ).
-But the right answer is 100.000$ rent expense and 10.000$ accrualsthank you
and please one more question if I am asking about a question in revision kit do I need to write all the question or it is possible to mention the question number and the witch revision kit .I have the BPP Revision Kit, and so there is no need to write out the question if it is from the BPP Kit 🙂
The question says that the rent is paid in arrears – not in advance. Therefore the last payment before the year end (which was on 1 January) will have been for October, November, and December of 20X1.
So they are still owing for January 20X2, which is why there is an accrual for 1 month.Have you watched my free lectures on accruals and prepayments? The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.
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