• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

Prepayment

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Prepayment

  • This topic has 6 replies, 4 voices, and was last updated 11 years ago by Anonymous.
Viewing 7 posts - 1 through 7 (of 7 total)
  • Author
    Posts
  • March 3, 2014 at 7:52 am #161313
    muradn
    Member
    • Topics: 50
    • Replies: 53
    • ☆☆

    When A makes prepayment for rent to B, A records it as follows:

    Dr Expence Dr Prepayment
    Cr Cash, Cr Expence

    But i ask you, how B records that prepayment amount which is prepaid to him in his accounting?

    March 3, 2014 at 9:36 am #161318
    Ruby
    Member
    • Topics: 4
    • Replies: 46
    • ☆☆

    Hi, when B receives the prepayment, it is considered prepaid income (unearned revenue) to them. Its nature is LIABILITY.
    The transaction will be recorded in B books as follow:
    1. When receive the prepayment:
    Dr. Cash/ bank
    CR. Income
    2. Income recorded, not incurred until next year:
    Dr. Income
    Cr. Prepaid Income (liability)

    Hope this helps.

    March 3, 2014 at 10:06 am #161320
    muradn
    Member
    • Topics: 50
    • Replies: 53
    • ☆☆

    thx Ruby..

    March 3, 2014 at 5:13 pm #161360
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    Ruby is correct 🙂

    March 6, 2014 at 9:23 am #161604
    Anonymous
    Inactive
    • Topics: 17
    • Replies: 53
    • ☆☆

    you removed my post but i was correct.

    Accrued Interest = A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, but not yet paid or received. Accrued interest occurs as a result of the difference in timing of cash flows and the measurement of these cash flows.

    so the interest would have been an accrual at 31 Dec

    March 6, 2014 at 10:42 am #161615
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    No!

    Firstly I did not remove any post.

    Secondly, in an exam you must refer to it as accrued income or accrued expense. (Interest, for example, could be either because we might be paying interest or receiving interest)

    Thirdly, the word accruals on its own always means an accrued expense.

    The definition you quoted does not even mention the word accruals (accrual accounting is mentioned but accrual accounting is an expression covering much more than just recording accrued income and accrued expenses).

    March 6, 2014 at 11:10 am #161617
    Anonymous
    Inactive
    • Topics: 17
    • Replies: 53
    • ☆☆

    thanks for this John! i was about to rip the book up but
    you didn’t remove any post but the entire topic 🙂 it was a mess anyway so i don’t mind

  • Author
    Posts
Viewing 7 posts - 1 through 7 (of 7 total)
  • The topic ‘Prepayment’ is closed to new replies.

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • osman-the-zephyr@ on MA Chapter 1 Questions Accounting for Management
  • adebusola on MA Chapter 1 Questions Accounting for Management
  • Sharith on Interest rate risk management (1) Part 5 – ACCA (AFM) lectures
  • Sharith on Interest rate risk management (1) Part 5 – ACCA (AFM) lectures
  • John Moffat on Discounted Cash Flow Further Aspects, Replacement – ACCA Financial Management (FM)

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in