Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › Accruals and Prepayments.
- This topic has 3 replies, 2 voices, and was last updated 6 years ago by Ken Garrett.
- AuthorPosts
- December 3, 2017 at 8:37 pm #420029
Which of the following assertions do not relate to accruals and prepayments?
1)Existence
2)Completeness
3Cutt-Off
4)Valuation
How is the assertion of cutt-off not related to accruals and prepayments because if the accruals are not recorded in the correct period they can be over/understated right?December 3, 2017 at 9:15 pm #420036Accruals and prepayments are items on the SOFP and cut-off is not an assertion there.
However, an accrual also affects an expense and for that effect cut-off is important.
December 3, 2017 at 9:48 pm #420037@kengarrett said:
Accruals and prepayments are items on the SOFP and cut-off is not an assertion there.However, an accrual also affects an expense and for that effect cut-off is important.
Well cannot get the logic behind this.If Expenses can be over/understated because of the cutt-off why the liabilities and assets also cannot be under/over stated because of the wrong cutt-off?
December 4, 2017 at 3:15 am #420055I agree, and really the question is not a good one.
- AuthorPosts
- The topic ‘Accruals and Prepayments.’ is closed to new replies.