ACCRUALS AND PREPAYMENTS. GOLDEN RULE We only include items of expense and revenue that apply to the accounting period when preparing the trading profit.

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ACCRUALS AND PREPAYMENTS

GOLDEN RULE We only include items of expense and revenue that apply to the accounting period when preparing the trading profit and loss account Accounting period = the time frame associated with the account being prepared

ACCRUALS (DUE) An amount due to be paid by the company e.g. Light and Heat Amount due at the end of the period  Add to the relevant item  Show as a current asset (revenue due)  Show as a current liability (expenditure due) Amount due at the start of the period Minus from the relevant item

PREPAYMENTS (PREPAID) An amount of money paid in advance Prepayment at the end of the period Minus from the relevant item Show as a current asset (expenditure prepaid) Show as a current liability (revenue prepaid) Prepayment at the start of the period Add to the relevant item