Understand Accruals and Prepayments | Accruals and Prepayments Simplified

Accruals and Prepayments made EASY: learn the basic concepts and how to solve accruals and prepayments exam questions with a helpful template. We'll do question 16 from the ACCA FA specimen exam together and learn how to use the accruals / prepayments template with an exam question. In this video, accruals and prepayments are explained and made easy.
00:00 Introduction
00:38 Basic expense account review
01:32 Matching concept explained
01:55 Prepayments explained
06:10 Accruals explained
09:20 exam template/pro forma explained
13:30 FA specimen exam question 16 explained
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Steve Willis ACCA
How to Pass ACCA Exams
Accruals and Prepayments Help

[@AllPraiseToYeshua]

As a chartered accountant I recall how tricky this concept was to master when I was starting off. Wish I had this explanation when I was a student as is so well explained 😊

[@SteveWillisACCA]

Glad it was helpful!

[@michaeladebiyi8034]

This is good. I understand accrual and prepayment a lot better now. Thank you

[@adrianazafirahmuhamadadnan5221]

I've just started my A-FIA in July, your videos has been a great help to understanding the concepts!!

[@SteveWillisACCA]

Glad they're helping:)

[@princessnaipie]

Thank you so much for this!!

[@SteveWillisACCA]

You're welcome!

[@mahkal1357]

messaging again I can't thank you enough for this video. you are an excellent teacher and storyteller. thank you so much for this great work

[@SteveWillisACCA]

That's kind of you :)

[@nell8060]

Simply the best. Thank you, sir!

[@SteveWillisACCA]

Glad it helped :)

[@Ashi_kmm]

Thank you so muchh

[@SteveWillisACCA]

Glad it helped!

[@ojellyarmy762]

This video was soooo helpful. I was so disappointed to find out you don't have any other videos for FA(F3)🥺

[@SteveWillisACCA]

Sorry about that! I will add more

[@salahaddin2009]

Very good, great teaching method.

[@SteveWillisACCA]

Glad you liked it

[@classiccatastrophe1518]

Awesome sir thank you so much

[@SteveWillisACCA]

Most welcome

[@kapambwebright4109]

This is helpful thank you sir

[@SteveWillisACCA]

Glad it helped

[@hashimabasssharif4313]

Hello, I understood better but I have one question. you told us that accrual forwards is taken to the credit side but in the last question, you took it into the Debit side so the amount went to PL it's accrued or prepayments. I am confused in the last question

[@user-ue1te2yp7o]

Good job mate easy and striate forward

[@SteveWillisACCA]

glad it helped!

[@Itsgraceparry]

Reconciling item of 200 in credit of rent expense should be revesed and move to prepayment account as a b/f.

[@SteveWillisACCA]

Correct! This video is an intro to the concepts.

[@lucypeterson9764]

Thank you sir

[@SteveWillisACCA]

Welcome

[@TheAdamsFamilyTravels]

I just can't get this concept into my head. I still got the question wrong at the end and worked it out to be $5300 because I thought the amount carried forward would need to be subtracted in order to work out the amount going into the P&L account🤥

[@SteveWillisACCA]

Give it another try. Closing Prepay: added too much to the PL. Closing Accrual: Didn't add enough.

[@isaacweah2780]

I noticed you expenses for the prepayment which not wrong.but doing this requires reversing entry.but if we did record the entry as prepayment we would pass an adjusting entry. Plus. elaborate on this further.

[@SteveWillisACCA]

Hi there, I'm showing the simple impact on the PL and balance sheet--yes, there are the reversing entries but I didn't go there in this introductory video

[@raniakhan9630]

great one sir

[@SteveWillisACCA]

Thanks, Manvi

[@kansimejeremiah3457]

But finally understood after repeating 20times

[@SteveWillisACCA]

Hi, what was the unclear part? Maybe I can improve it.

[@mahkal1357]

thank you for this. but what about reversals? many thanks

[@SteveWillisACCA]

hey there! That final balancing figure in the Receivables or Payables T-account is the start of the reversal. The corresponding debit/credit goes to the balance sheet and completes the reversal. E.g. Closing Prepaid expense: DEBIT Current asset : CREDIT Expense. I showed the credit part in the video.

[@MYTHOMINHTRAN]

What is the charge of P/L? Profit and Loss? May I ask?

[@SteveWillisACCA]

Yes, P/L stands for profit and loss.

[@lynxo5695]

I'm doing AAT level 3, is this example you're doing too advanced for my level and what's expected to know?

[@SteveWillisACCA]

AAT has this same concept in the syllabus.

[@dureshahwar4278]

It was really good sir but the income account was a little confusing...

[@SteveWillisACCA]

Yes, that is the tricky part of this. The main idea is that the income account is a mirror of the expense account.
So you DEBIT cash CREDIT income. In the expense account, it's DEBIT expense CREDIT Cash. Sleep on it and come back again, after you've tried some questions and I think it will make sense.

[@classiccatastrophe1518]

Can you please tell me how to calculate movement in an account ?

[@SteveWillisACCA]

Hi, do you mean the change in an account balance?

[@classiccatastrophe1518]

@@SteveWillisACCA the question is as follows sir the opening balance of a bank account is 1000 cr and the closing balance 1000 dr and they give the answer as 2000dr i assumed that they used closing balance - opening balance to calculate the movement of the account but I'm not confident about it gives the answer but I don't know the meaning

[@dansaali5536]

Let's see how this goes

[@SteveWillisACCA]

And how did it go? Does it make sense now?

[@reds1ars2244]

I am stuck in subscribtion account can you please show it from very begining ???

[@omit4563]

i am here cause i am gonna fail

[@Ashi_kmm]

im here too rn xD