Page 395 - Microsoft Word - 00 BA3 IW Prelims STUDENT.docx

Answers to questions

Example 1: Solution
Heat and light
Dr $ Cr $
28-Feb Bank 460
31-May Bank 440
30-Aug Bank 390
30-Nov Bank 420
Statement of
31-Dec Accrual 150 31-Dec profit or loss 1,860
1,860 1,860

The accrual of $150 represents one-third of the bill received on 28 February
20X2 (i.e. the amount applicable to the month of December 20X1). This
amount will be credited to the accrual expenses account which will appear on
the statement of financial position under current liabilities.

This ensures the correct amount is charged to the statement of profit or loss
for the year 20X1.

389