Simple Accounting Question

Which, eh, I can't remember how to do. My leaving cert book is at home and I used to be quite good at accounting, but that was a long time ago!

I'm looking for what the accounting charge for the P&L A/C is for the 'current year' in this example. I can't remember (nor can google help me) with examples with accruals from last year and prepayments from last year, as well as closing accruals and closing prepayments. I know that it'll be a simple addition and subtraction, but I'm unsure which is the correct way to do it.

So, here we go.

Accruals brought forward       Prepayments brought forward         Paid      Closing Accrual           Closing Prepayment             P/L Charge
Telephone                   450                           120                        1600                350                       125                   ?

Any help would be appreciated. And just so you can all laugh, this is on my final year exam paper for Engineering!

EDIT: And if there was one 'overriding characteristic' for all accounting information, what would it be?

smcgiff

Myth wrote:

EDIT: And if there was one 'overriding characteristic' for all accounting information, what would it be?

Hard to apply just one - I'd perhaps limit it to "Material and Accurate"

I'm getting 1,495 as the charge for the current period

Btw, could you appply one 'overridding characteristic' to engineering?

kluivert

smcgiff wrote:

I'm getting 1,495 as the charge for the current period

Am getting the same.

Think about it another way. What is the telephone EXPENSE for the current year.

Start with bank, you paid 1600e.

Now deal with the opening balances.

Take away the opening accural - this relates to an expense incurr last year but paid in the current year.

Add the opening prepayment - this relates to an expense incurr this year but paid for last year.

You should have 1270e now.

Now deal with the closing balances.

Add the closing accural - this relates to an expense incurr this year but will be paid for next year.

Take way the closing prepayment - this relates to an expense incurr next year but paid for in the current year.

Your answer should be 1495e - telephone expenses for current year charged to P/L

Thanks guys, especially kluivert since it was the method I was after

kluivert

Myth wrote:

Thanks guys, especially kluivert since it was the method I was after

Another satisfied customers.

Sometimes its best not to think of it as numbers, rather think it out logically, what the terms are defined as and start with the bank as everything stems from there.

Sounds like a Cashflow statement question.

smcgiff

Myth wrote:

Thanks guys, especially kluivert since it was the method I was after

Remember - I'd already given him the answer and he just had to work backwards!

kluivert

smcgiff wrote:

Remember - I'd already given him the answer and he just had to work backwards!

Are you sure I just wasnt checking up on you.

smcgiff

kluivert wrote:

Are you sure I just wasnt checking up on you.

I'm glad somebody was!

ircoha

smcgiff wrote:

Btw, could you appply one 'overridding characteristic' to engineering?

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Hanley

Prudency is the overriding accounting concept btw.

smcgiff

Hanley wrote:

Prudency is the overriding accounting concept btw.

Not since FRS 18 replaced SSAP 2 - Prudence and consistency have been downgraded from accounting concepts to merely desirable.

Hanley

smcgiff wrote:

Not since FRS 18 replaced SSAP 2 - Prudence and consistency have been downgraded from accounting concepts to merely desirable.

Really???

****... prospective students need to stay away from NCI so.

smcgiff

Hanley wrote:

Really???

****... prospective students need to stay away from NCI so.

NCI? What would they know!

Hanley

smcgiff wrote:

NCI? What would they know!

Well obviously nothing.... UGH! Thank God it's nearly over.