Chapter 7_Important

Question 1

Accruals and prepayments

Answer 1

The accruals basis of accounting means that to calculate the profit for the period we must include all the income and expenditure relating to the period , whether or not the cash has been received or paid or an invoice received

Question 2

Accrued expenditure

Answer 2

An accrual arises where expenses of the business for the current period have not been paid at hte end of the year