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Prepayments

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Prepayments

Viewing 2 posts - 1 through 2 (of 2 total)
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  • July 15, 2024 at 8:04 pm #708520
    alikhakar
    Participant
    • Topics: 187
    • Replies: 79
    • ☆☆☆

    I qualified ACCA back in 2021 with he help of opentuition and this question brought me back here..

    Suppose we have received an insurance invoice of £1,200 on 1st October 2024 and our year end is 31 December 2024. And we have not made the payment as on 31st December 2024.

    Would we record the journal as below?
    DR. Insurance expenses £300
    Dr. Prepayments £900
    Cr. Creditors £1,200

    If yes, we are recording a prepayment of £900 but we never really made any payment.
    If no, what should be the journal?

    I’m confused about whether we can still record prepayment when we have not actually made the payment?

    July 23, 2024 at 6:40 am #708783
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7136
    • ☆☆☆☆☆

    Hi,

    Good to see you back. If we have received the invoice, used the service but not made a payment then we have an accrual.

    Thanks

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