FA Tutorial 3 Accruals

Jul 17, 2026

Upload by Asher

Financial accounting tutorial focused on accruals and prepayments through multiple rent and insurance scenarios. Questions require adjusting profit or loss and statement of financial position amounts for periods covered by payments made quarterly in advance or part-way through the year, including rent escalations, insurance paid for future coverage, and the split between expense recognition and prepayment/accrual balances. Additional tasks include preparing water usage ledger accounts under both monthly/annual payment terms and arrears settlement, and recording year-end adjustments for stationery in hand, unpaid rent, rates timing differences, unbilled fuel, and insurance coverage apportionment before closing accounts.

LanguageEnglish

CategoryExam

FormatPDF

Pages2

Reading Time5 min

AccessFree to download

1. A business compiling its financial statements for the year to 31 July each year pays rent quarterly in advance on 1 January, 1 April, 1 July and 1 October each year. The annual rent was increased from $60,000 per year to $72,000 per year as from 1 October 20X6 . What figure should appear for rent expense in the business’s profit or loss for the year ended 31 July 20X7? A $62,000 B $63,000 C $69,000 D $70,000 2. At 1 July 20X6 a company had prepaid insurance of $8,200 . On 1 January 20X7 the company paid $38,000 for insurance for the year to 30 September 20X7 . What figures should appear for insurance in the company’s financial statements for the year ended 30 June 20X7? Profit or loss Statement of financial position A $27,200 Prepayment $19,000 B $39,300 Prepayment $9,500 C $36,700 Prepayment $9,500 D $55,700 Prepayment $9,500 3. During 20X6, Benz paid a total of $60,000 for rent, covering the period from 1 October 20X5 to 31 March 20X7 . What figures should appear in the company’s financial statements for the year ended 31 December 20X6? Profit or loss Statement of financial position A $40,000 Prepayment $10,000 B $40,000 Prepayment $15,000 C $50,000 Accrual $10,000 D $50,000 Accrual $15,000 4. Jam is preparing its financial statements for the year ended 30 June 20X7 . Its draft trialvbalance includes: (1) A balance for office expenses (including rent) paid in the financial year of $89,100 (2) A balance for prepayment of rent at 1 July 20X6 of $9,500 On 31 May 20X7 Jared paid three months’ rent in advance of $15,300 . Which of the following will be the figure for office expenses in Jam’s statement of profit or loss for the year ended 30 June 20X7? 5. Holly began trading on 1 July 20X6. The business is now preparing its financial statements for the year ended 30 June 20X7. Rent is charged for the year from 1 April to 31 March, and was $1,800 for the year ended 31 March 20X7 and $2,000 for the year ended 31 March 20X8 . Rent is payable quarterly in advance on 1 March, 1 June, 1 September and 1 December. What is the charge to Holly’s statement of profit or loss for rent for the year ended 30 June 20X7? 6. On 1 June 20X6, Heather paid an insurance invoice of $2,400 for the year to 31 May 20X7 . How will this be accounted for in Heather’s financial statement for the year ended 31 December 20X6? Statement of profit of loss Statement of financial position A $1,000 $1,400 prepayment B $1,400 $1,000 accrual C $1,400 $1,000 prepayment D $1,200 $1,200 prepayment 7. On 1 January, a business had prepaid insurance of $10,000 . On 1 August it paid, in full, an insurance invoice of $36,000 for the year to 31 July 20X7 . What amounts will be included in the financial statements for the year ended 31 December 20X6? Statement of profit or loss Statement of financial position A $15,000 $21,000 B $22,000 $23,000 C $25,000 $21,000 D $25,000 $15,000 8. Dino started a business on 1 January 2014. I

Jul 17, 2026

Upload by Asher