Non-current Assets
Other Payables & Receivables
Questions test your ability to adjust for prepayments and accruals in both the income statement and the statement of financial position. Getting the direction of adjustment right is key — and a very common source of lost marks.
Always show the adjustment clearly — prepayments reduce the expense in the income statement and appear as a current asset; accruals increase the expense and appear as a current liability. Common mistake: adjusting in the wrong direction or placing the item on the wrong side of the statement of financial position.
Key Concepts to Revise
Prepayments (Other Receivables)
Expenses paid in advance for a future period. Deduct from the expense in the income statement. Show as a current asset in the SFP.
Accruals (Other Payables)
Expenses incurred but not yet paid. Add to the expense in the income statement. Show as a current liability in the SFP.
Income in Advance
Revenue received but not yet earned — deduct from income in the income statement and show as a current liability in the SFP.
Accrued Income
Revenue earned but not yet received — add to income in the income statement and show as a current asset in the SFP.
Past Paper Questions
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