Could I get some assistance with year end issues and accounting concepts? Watch
I'm asked to explain whether or not an accounting adjustment is needed for each query, setting out the workings for the amounts, t accounts and entries required, with reasoning.
I'm not really sure how to start out.
The first question;
Year end is June 30th 2014. Electricity bill of £600 for the quarter to July 31st in august 2014. She has accounted for all the expenditure in the year starting 1st July 2014.
What needs to be adjusted? I'm a little confused as to what they are asking of me.
Any help would be met with a gratitude unmatched. Thank you
*this is probably in the wrong section...* Looking for the right one. I just noticed the section.
The note tells you that they paid for a bill for the period 1 May 2014 to 31 July 2014 after the year end. As such, the bill was unpaid during the accounting period and so an accrual needs to be created for the amount, with the corresponding entry going to the relevant expense account.
Furthermore, please note that items such as prepayments, accruals and closing inventory are all year end adjustments, including the one you describe above.