Accruals and Prepayments (Y7C8)

1	A company receives rent for subletting part of its office block. Rent, receivable quarterly in advance, is received as follows:
	Date of receipt 1 October 20x1 30 December 20x1 4 April 20x2 1 July 20x2 1 October 20x2		Period covered 3 months to 31 December 20x1 3 months to 31 March 20x2 3 months to 30 Junes 20x2 3 months to 30 September 20x2 3 months to 31 December 20x2				$ 7,500 7,500 9,000 9,000 9,000
	What figures, based on these receipts, should appear in the company's financial statements for the year ended 30 November 20X2?
		Statement of profit or loss			Statement of financial position
	A	$34,000 Debit			Rent in arrears (Dr) $3,000
	B	$34,500 Credit			Rent received in advance (Cr) $6,000
	C	$34,000 Credit			Rent received in advance (Cr) $3,000
	D	$34,000 Credit			Rent in arrears (Dr) $3,000
2	A company pays rent quarterly in arrears on 1 January, 1 April, 1 July and 1 October each year. The rent was increased from $90,000 per year to $120,000 per year as from 1 October 20X2. What rent expense and accrual should be included in the company's financial statements for the year ended 31 January 20X3?
		Rent expenses $			Accrual $
	A	100,000			20,000
	B	100,000			10,000
	C	97,500			10,000
	D	97,500			20,000
3	At 31 March 20X2 a company had oil in hand to be used for heating costing $8,200 and an unpaid heating oil bill for $3,600. At 31 March 20X3 the heating oil in hand was $9,300 and there was an outstanding heating oil bill of $3,200. Payments made for heating oil during the year ended 31 March 20X3 totalled $34,600. Based on these figures, what amount should appear in the company's statement of profit or loss and other comprehensive income for heating oil for the year?
	A	$23,900
	B	$36,100
	C	$45,300
	D	$33,100
4	A company has sublet part of its offices and in the year ended 30 November 20X3 the rent receivable was:
	Until 30 June 20x3 From 1 July 20x3			$8,400 per year $12,000 per year
	Rent was paid quarterly in advance on 1 January, April, July, and October each year. What amounts should appear in the company's financial statements for the year ended 30 November 20X3?
		Rent receivable			Statement of financial position
	A	$9,900			$2,000 in sundry payables
	B	$9,900			$1,000 in sundry payables
	C	$10,200			$1,000 in sundry payables
	D	$9,900			$2,000 in sundry receivables
5	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 20X3. What figure should appear for rent expense in the business’s statement of profit or loss and other comprehensive income for the year ended 31 July 20X4?
	A	$69,000
	B	$62,000
	C	$70,000
	D	$63,000
6	Diesel fuel in inventory at 1 November 20X7 was $12,500, and there were invoices awaited for $1,700. During the year to 31 October 20X8, diesel fuel bills of $85,400 were paid, and a delivery worth $1,300 had yet to be invoiced. At 31 October 20X8, the inventory of diesel fuel was valued at $9,800. What is the value of diesel fuel to be charged to the statement of profit or loss and other comprehensive income for the year to 31 October 20X8?
	A	$87,700
	B	$89,400
	C	$88,500
	D	$91,100
7	The electricity account for the year ended 30 June 20X1 was as follows.
	Opening balance for electricity accrued at 1 July 20X0 Payments made during the year 1 August 20X0 for three months to 31 July 20X0 1 November 20X0 for three months to 31 October 20X0 1 February 20X1 for three months to 31 January 20X1 30 June 20X1 for three months to 30 April 20X1 1 August 20X1 for three months to 31 July 20X1								$ 300 600 720 900 840 840
	Which of the following is the appropriate entry for electricity?
		Accrued At 30 June 20x1			Charge to SPL Year ended 30 June 20x1
	A	$nil			$3,060
	B	$460			$3,320
	C	$560			$3,320
	D	$560			$3,420
8	The year-end of M Co is 30 November 20X0. The company pays for its gas by a standing order of $600 per month. On 1 December 20W9, the statement from the gas supplier showed that M Co had overpaid by $200. M Co received gas bills for the four quarters commencing on 1 December 20W9 and ending on 30 November 20X0 for $1,300, $1,400, $2,100 and $2,000 respectively. Which of the following is the correct charge for gas in M Inc's statement of profit or loss for the year ended 30 November 20X0?
	A	$6,800
	B	$7,000
	C	$7,200
	D	$7,400
9	A business compiling its financial statements for the year to 31 January each year pays rent quarterly in advance on 1 January, 1 April, 1 July and 1 October each year. After remaining unchanged for some years, the rent was increased from $24,000 per year to $30,000 per year as from 1 July 20X0. Which of the following figures is the rent expense which should appear in the statement of profit or loss for year ended 31 January 20X1?
	A	27,500
	B	29,500
	C	28,000
	D	29,000
10	B, a limited liability company, receives rent for subletting part of its office premises to a number of tenants. In the year ended 31 December 20X4 B received cash of $318,600 from its tenants. Details of rent in advance and in arrears at the beginning and end of 20X4 are as follows:
						31 December
						20x4 $			20x3 $
	Rent received in advance Rent owing by tenants All rent owing was subsequently received					28,400 18,300			24,600 16,900
	What figure for rental income should be included in the statement of profit or loss of B for 20X4?
	A	$341,000
	B	$336,400
	C	$300,800
	D	$316,200
11	During 20X4, B, a limited liability company, paid a total of $60,000 for rent, covering the period from 1 October 20X3 to 31 March 20X5. What figures should appear in the company's financial statements for the year ended 31 December 20X4?
		Statement of profit or loss and other comprehensive income $						Statement of financial position $
	A	40,000						10,000 Prepayment
	B	40,000						15,000 Prepayment
	C	50,000						10,000 Accrual
	D	50,000						15,000 Accrual
12	The trainee accountant at Judd Co has forgotten to make an accrual for rent for December in the financial statements for the year ended 31 December 20X2. Rent is charged in arrears at the end of February, May, August and November each year. The bill payable in February is expected to be $30,000. Judd Co’s draft statement of profit or loss shows a profit of $25,000 and draft statement of financial position shows net assets of $275,000. What is the profit or loss for the year and what is the net asset position after the accrual has been included in the financial statements?
		Profit for the year			Net asset position
	A	$15,000			$265,000
	B	$15,000			$285,000
	C	$35,000			$265,000
	D	$35,000			$285,000
13	Buster's draft financial statements for the year to 31 October 20X5 report a loss of $1,486. When he prepared the financial statements, Buster did not include an accrual of $1,625 and a prepayment of $834. What is Buster's profit or loss for the year to 31 October 20X5 following the inclusion of the accrual and prepayment?
	A	A loss of $695
	B	A loss of $2,277
	C	A loss of $3,945
	D	A profit of $1,807
14	Bookz Co pays royalties to writers annually, in February, the payment covering the previous calendar year. As at the end of December 20X2, Bookz Co had accrued $100,000 in royalties due to writers. However, a check of the royalty calculation performed in January 20X3 established that the actual figure due to be paid by Bookz Co to writers was $150,000. Before this under-accrual was discovered, Bookz Co's draft statement of profit or loss for the accounting year ended 31 December 20X2 showed a profit of $125,000 and their draft statement of financial position showed net assets of $375,000. What will Bookz Co's profit and net asset position be after an entry to correct the under-accrual has been processed?
		Profit for the year			Net asset position
	A	$175,000			$425,000
	B	$125,000			$375,000
	C	$75,000			$325,000
	D	$25,000			$225,000