Wonering if someone could help? I was looking on some info about accrual accounting. I am doing a question on my course at the moment and it wants me to use the accrual accounting method but i have never done this before so don't know what kind of entries to do?
I think I got the prepayment sorted out but what kind of entries do I do for example for invoices i have received and not paid and invoices I have sent out and not received payment for? Do i put these through as accruals?
Accruals are costs that have been accrued and must be attributed to the accounting period that you are dealing with. For example, if, in this accounting period you have used labour which you have not yet paid, you have accrued wages. So, when you do your P&L account, accrued wages are added to paid wages to give you a total figure for wages in this period. The accrual amount is shown in your Balance Sheet as a current liability.
