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(1) Accruals
(2) PrepaymentThese are cashflow items or Income Statement items or both.
Please define both separately.
An accrual is an expense for the period that has not yet been paid. It therefore is part of the total expense on the Statement of Profit or Loss and is also a liability on the Statement of Financial Position.
A prepayment is where an expense has been overpaid during the period. It is therefore not part of the total expense on the Statement of Profit or Loss and is an asset on the Statement of Financial Position.
They are both relevant for Paper FA rather than Paper MA, and are explained in detail in our free Paper FA lectures.
Tutor, yes, I mistakenly wrote in MA instead of FA.
Prepayment would be shown as cash outflow in Statement of cashflow. However, Accrual would be shown as expense in income statement.
Am I right sir?No.
I wrote in my previous reply the statements that they affect.
You must watch my free lectures on accruals and prepayments where it is all explained in detail.
The lectures are are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
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