Hi
So basically after watching the lectures on Accrual and prepayments, it has come to my attention that the part c and part d only focus on Accruals that are liabilities, after doing the practice end of session questions I realise that Accruals can also be an asset, for example expecting money not yet received, but then is that not account receivable? I am just getting about confused
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Accrual Question Financial Accounting
6y ago#1Accruals most commonly refer to expenses that have been incurred but not yet paid.
However it can apply also to income that has been earned but not yet received (but normally this is referred to as accrued income).
The entries for dealing with them are exactly the same, but in reverse because they relate to income rather than to expenses.
Is accrued income the same as accounts receivables?
6y ago#3In the sense that they are both current assets, then the answer is yes.
However they appear for two slightly different reasons. Accounts receivables appear because we have invoiced for sales and the customer has not yet paid. Accrued income appears because although we are owed money (because for instance we are renting out space to someone) but we have not yet invoiced them for it.
The end result however is that they are effectively the same.
So in theory there should be two different T accounts, one for accured income and one for accounts receivable? Both being asset accounts?
6y ago#5Yes - there should be two separate accounts. However appreciate that you cannot be asked to write up t-accounts in the exam :-)
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