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WAEC Financial Accounting 1997 Question 31

Question 31

Accruals and Prepayments

An expense becomes an accrual because it

  1. A.is due for payment
  2. B.is a Profit and Loss Account item
  3. C.is a Trading Account item
  4. D.is to be paid within the next one year
  5. E.must appear in the balance sheet.
Show the answer and explanation

Answer: A (is due for payment)

Explanation

An accrual is an expense that has been incurred and is due but not yet paid at the end of the period.