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Accruals

Forums › Ask CIMA Tutor Forums › Ask CIMA BA3 Tutor Forums › Accruals

  • This topic has 1 reply, 1 voice, and was last updated 3 years ago by sam543.
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    Posts
  • March 1, 2020 at 10:34 pm #563670
    sam543
    Member
    • Topics: 21
    • Replies: 4
    • ☆

    Hello,
    I am struggling to understand the difference between Accounts payable account on Balance sheet and the Accruals liability account on Balance sheet.
    Do I understand well that the difference is only whether an invoice was received or not?

    For example, a company consumes electricity in March; receives invoice in April and pays out the cash in the May.
    In this situation in March the company will recognise Accrued liability: Dr Expense Cr Accrued liability
    On 1st of April the accrual will be released Dr Accrued liability Cr Expense and in the end of April company will recognise accounts payable: Dr Expense Cr Accounts payable. Would not this mean they duplicated expenses as they recognised same expense on the PL in April and in March?
    In May cash paid: Dr Accounts payable Cr Bank

    Could you please help with the above please?

    Thank you.

    March 18, 2020 at 8:15 am #565373
    sam543
    Member
    • Topics: 21
    • Replies: 4
    • ☆

    Hello,

    Can you please help with the above?

    Thank you in advance!

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    Posts
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