Other Payables And Other Receivables (Copy)
Cheat Sheet: 4.3 Other Payables and Other Receivables
O Level and IGCSE Accounting – Quick Revision
Key Concepts
| Term | Definition |
|---|---|
| Matching Principle | Expenses and incomes should be recorded in the period they relate to, not when cash is paid or received. |
| Accrued Expense | An expense that has been incurred but not yet paid at the end of the accounting period. |
| Prepaid Expense | An expense that has been paid in advance for the next accounting period. |
| Accrued Income | Income that has been earned but not yet received at the end of the accounting period. |
| Prepaid Income | Income that has been received in advance for future periods. |
Ledger Account Examples
Accrued Expense (e.g. Wages Owed)
Journal Entry:
- Dr Expense (e.g. Wages)
- Cr Accrued Expenses
Ledger: Accrued Expenses Account
| Date | Details | Dr ($) | Cr ($) |
|---|---|---|---|
| 31 Dec | Balance c/d | 800 | |
| Wages |
Prepaid Expense (e.g. Insurance Paid in Advance)
Journal Entry:
- Dr Prepaid Expenses
- Cr Expense (e.g. Insurance)
Ledger: Prepaid Expenses Account
| Date | Details | Dr ($) | Cr ($) |
|---|---|---|---|
| 31 Dec | Insurance | 500 | |
| 1 Jan | Balance b/d | 500 |
Accrued Income (e.g. Rent Earned but Not Yet Received)
Journal Entry:
- Dr Accrued Income
- Cr Income (e.g. Rent Income)
Ledger: Accrued Income Account
| Date | Details | Dr ($) | Cr ($) |
|---|---|---|---|
| 31 Dec | Rent Income | 600 | |
| 1 Jan | Balance b/d | 600 |
Prepaid Income (e.g. Commission Received in Advance)
Journal Entry:
- Dr Income (e.g. Commission Income)
- Cr Prepaid Income
Ledger: Prepaid Income Account
| Date | Details | Dr ($) | Cr ($) |
|---|---|---|---|
| 31 Dec | Balance c/d | 400 | |
| Commission Income |
Matching Rule Summary Table
| Situation | Adjusting Entry | Affects |
|---|---|---|
| Accrued Expense | Dr Expense, Cr Accrued Expense | Increases expenses and liabilities |
| Prepaid Expense | Dr Prepaid Expense, Cr Expense | Decreases current period expense |
| Accrued Income | Dr Accrued Income, Cr Income | Increases income and assets |
| Prepaid Income | Dr Income, Cr Prepaid Income | Decreases current period income |