Meaning of Pre- Payments And Accruals & Distinctions Between Pre-Payment And Accruals - SS1 Accounting Past Questions and Answers - page 1

Payments made by a business in advance for goods or services that will be received or consumed in the future

Payments made by a business after goods or services have been received or consumed

Payments made by a business for goods or services that are not required

Payments made by a business for goods or services that have not been received or consumed

Expenses that a business has incurred but has not yet paid for or revenue that a business has earned but has not yet received payment for

Expenses that a business has paid for in advance or revenue that a business has received in advance

Expenses that a business has incurred but has not yet paid for or revenue that a business has earned but has already received payment for

Expenses that a business has not yet incurred or revenue that a business has not yet earned

As liabilities

As assets

As expenses

As revenues

As liabilities

As assets

As expenses

As revenues

Pre-payments involve payments made in advance for goods or services that have been received, while accruals involve expenses or revenue that have not yet been paid for or received

Pre-payments involve payments made in advance for goods or services that will be received or consumed in the future, while accruals involve expenses or revenue that have been incurred or earned but have not yet been paid for or received

Pre-payments are recorded as liabilities on the balance sheet, while accruals are recorded as assets

Pre-payments are expenses, while accruals are revenues