Quiz 57: Accruals and Prepayments Quiz

Test your knowledge of double entry bookkeeping with our accruals and prepayments quiz.

Accruals and prepayments are needed in bookkeeping to ensure that financial statements satisfy the matching concept. At the end of an accounting period, accruals and prepayments need to be calculated, and journal entries prepared to record the adjustments in the relevant accounts.

Accruals or accrued expenses are expenses which relate to the current accounting period but which have not yet been paid for. Prepayments or prepaid expenses are expenses which relate to a future accounting period but which have already been paid.

If you need a refresher course on this topic take a look at our adjusting entries tutorial or our adjusting journal entries – common examples tutorial for further information.

Start the Accruals and Prepayments Quiz

Click on an answer to reveal whether its Right! or Wrong

1. A business has a year ended 30 September 2016 and receives an invoice for rent of 6,000 for the six months to 31 December 2016. What accrual and prepayment is required for the invoice in the year end accounts ?
Wrong
Right!
2. During the year, a business paid an electricity bill for 900 for the 3 months to November 2016. The year end of the business is 30 September 2016, what accrual and prepayment is needed at the year end?
Right!
Wrong
3. A prepayment adjusting entry requires a debit entry to which account?
Right!
Wrong

 

4. A business has a beginning electricity accrual of 5,000, an ending accrual of 6,000, and during the year pays for electricity of 8,000. What is the electricity expense for the year?
Right!
Wrong
5. An accrual is an expense not yet paid for. True or false?
Wrong
Right!
6. An prepayment is an expense relating to the current accounting period. True or false??
Right!
Wrong
7. In the current accounting period ended 31 October 2016, a business pays annual insurance for the year ending 30 June 2017 of 4,800. What is the prepayment at the end of the year?
Wrong
Right!
8. Shortly after the end of an accounting period, a business receives an invoice for annual insurance to 31 August 2017 for 9,000. If the accounting period ended of 30 November 2016, what is the required accrual or prepayment?
Right!
Wrong
9.Accruals relate to expenses for a future accounting period. True or false?
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10. During the current accounting period, a business prepays rent for the quarter ending 31 March 2017 for 6,000. If the current year end is 31 December 2016, what accrual or prepayment will be needed at the year end?
Right!
Wrong

Try Another Double Entry Bookkeeping Quiz

The accruals and prepayments quiz is one of many of our online quizzes which can be used to test your knowledge of double entry bookkeeping, discover another at the links below.

Last modified December 14th, 2016 by Michael Brown

About the Author

Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years in all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University.

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