Accruals And Prepayments Cheat Sheet (Page 2 of 2) in pdf

Accruals And Prepayments Cheat Sheet Page 2

Accruals and Prepayments

Cheat Sheet

Income Accrued

Accrued opening balance (asset)

Bank

Statement of profit and loss

Accrued income at the end of the FY

Accrued income is money still owed to you at the end of the FY therefore it is an asset, and you’re adding it

to the income account.

Credit the income account – this will be shown in the adjustments column on the ETB, on the same line as

the income entry, this will increase the amount sent to the statement of profit or loss. The balancing entry

will be under accrued income expenses, which will be a debit in the statement of financial position as an

asset.

Prepaid Income

Prepaid opening balance (liability)

Bank

Profit and loss

Prepaid closing balance

Prepaid income is money paid to you but the goods or services have not yet been received, therefore it is a

liability.

To adjust for this debit the prepaid income account on the ETB to take the money out the income, credit

the statement of financial position as a current liability.

Accruals And Prepayments Cheat Sheet Page 2