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There’s a question in an old past paper I’m unable to solve, I need your help in understanding the logic behind the solution.
The question:
The figure for accruals in the TB is in respect of electricity accrued at 1.4.17. Electricity paid in the year ended 31.3.18 is for the period up until 31.1.18. An electricity invoice of $72,000 was received for the 3 months ended 30.4.18 and this was paid on 1.5.18.TB accruals figure: $100,000
TB electricity figure: $ 347,000As per the solution the amount charged to income statement is as follows:
347,000-52,000=295,000And accruals in SOFP is 100,000-52,000=48,000
I give it a try but failed,
my lv don’t even let me understand the question and what is going on.sometime I feel accounting exam really just testing our English lv istead of the accounting logic .
espeacially for student who English as a second language ,
it is hard to grap .sorry i couldn’t help,
hope you have already figured it out .Good Day .
Hi tkhue3296,
I’ve haven’t seen the full question but I’ve had an attempt at laying out an explanation. Let me know what you think.
SOFP = Prev. YE 100,000. This year = 72,000*2/3( =Feb & March less April) = 48,000. The change in Accruals is 52,000.
SOPL = If 347,000 was paid this year then 52,000 was accrual/electricity used in the previous financial year. 347,000-52,000 = 295,000 is this financial years’ expense.
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