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Prepayments treatment in TB

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Prepayments treatment in TB

  • This topic has 1 reply, 2 voices, and was last updated 9 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
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  • December 3, 2015 at 12:34 pm #287234
    racucamelia
    Member
    • Topics: 34
    • Replies: 39
    • ☆☆

    Hi John,

    at one of my multiple task questions in exam kit I have the following affirmation.
    “At 30.09.201×3, a prepayment for insurance paid in advance of 400 $ had not yet been accounted for. Insurance is classified ad administrative expense.”
    The amount in TB for admin expense is 65800 $ and I don’t understand why the amount of 400 $ is substracted from the amount of 65800 mentioned in trial balance, and not charged.

    Thank you,

    camelia

    December 3, 2015 at 3:19 pm #287292
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54701
    • ☆☆☆☆☆

    The amount in the TB will include all of the cash paid during this year for insurance. It will include the $400 paid in advance (since this has not been dealt with).

    However that means that $400 of the total is actually next years expense and not an expense of this year at all. So it needs removing from the current total.

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