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Somebody asked you this but i did not get it. Please explain these two queries.
1. What is the difference between Prepayment and Receivable?
2. What is the difference between Accrual and Payable?
Have you watched my lectures on accruals and prepayments?
1. Prepayments are when we have paid for an expense but have not used the expense in full during the accounting period. Receivables are when we have invoiced a customer but have not yet received payment.
2. Accruals are when we have used an expense during the accounting period but have not yet received an invoice.
Payables are when we are received in invoice from a supplier but have not yet paid it.Is it true that:
1. If invoice is received then it is prepayment whereas receiveable is when invoice is not received?2. In accrual, if invoice is not received then it is accrual whereas payable is when invoice is received?
3. I thought prepayments and receiveables were related to each other likewise accruals and payables?
1. It is a prepayment if the invoice covers part of the following accounting period.
Receivables are where we have sent invoices to customers but have not yet received payment.2. Correct.
Have you actually watched my lectures from the start (i.e. from Chapter 1 onwards)? Because all of this is explained in my lectures and you really cannot expect me to type them out again here 🙂
Sorry to ask again 🙂
1. I understood the prepayment but i don’t understand that when we pay the insurance do we received the invoice already and paid for it. (correct?)
2. Since prepayments are when we have paid for an expense but we pay for it only when we have received invoice from insurance company and then we make the payment?
3. In prepayment we pay for insurance once we have received the invoice and paid for it from insurance company. That’s why I said in the case of prepayment we have already received the invoice and made the payment. (correct?)
4. Please explain when we pay for the prepayment do we receive the invoice before we pay for the insurance (correct?)
I watched your lectures again nd again.
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