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Hi, sir i have a question i will ask it with help of an example,
The question is that let suppose our year end is 31 Dec 2002, and we have prepayment for rent for the month January and Feb 2003 (Next accounting period)
Now my question is that when we will move to 1st Jan 2003 (New accounting period), WHEN will we make entry to END prepayment for jan and feb :
Will we make entry to end january prepayment at 31st January, when month of jan gets end and similarly will we end prepayment for feb at 31st feb, when feb gets end ?
OR
Do We end prepayment for Jan and Feb as soon as we enter on new accounting period, i mean will we make entry on 1st January 2003 to end prepayments for january and feb ?Thanks for ur coperation open tuition 🙂
You create the prepayment on 31 December, and then reverse it on 1 January. In exams you only do it at the end of the year – not at the end of each month.
I do suggest that you watch our free lectures on this – our lectures are a complete course for Paper F3 and cover everything you need to pass the exam well.(However in the exam you cannot be required to produce t-accounts 🙂 )
hi sir, i ve found this question on the test and it was somehow confusing.
the company has paid insurance $21600 in 2008 covering the year ending august 2009. what amount should appear in the company financial position at 31st dec 2008?
when i work it out i assumed it covers just 4 month in 2008 i.e sep – dec(21600*4/12)=$7200. but it was worked out otherwise as 21600*8/12=14400. which i think its not correct because for month was contained in the year 2008 not 8 monthThe question does not ask for the expense in the Statement of profit or loss, it asks for what will appear in the Statement of financial position.
In the Statement of financial position will appear the amount of the prepayment, and the prepayment is of the 8 months from 1 Jan 2009 to 30 August 2009.
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