If a business hasn't received an electricity bill for 3 years and the estimated cost is £500 per month. Should they accrue for £6000 each year for three years, or will it cumulate and the accrual liability be £6,000, then £12,000, then £18,000 for each of the three years?
2007-08-04 03:58:03 · 5 answers · asked by Cheryl M 2 in Business & Finance ➔ Other - Business & Finance
They should accrue 6000 for each of the three years.
2007-08-04 04:02:21 · answer #1 · answered by Stareyes 5 · 1⤊ 0⤋
This being a revenue item, irrespective of the payment being made, you will debit the Profit and loss by 6000 each year and the unpaid amt will be carried to b/s as other creditors; the other creditors figure in b/s will get added at the end of each year- at the end of 1st year, 6000, 2nd year 12000 and 3rd year 18,000. Creditors is a Liability item and is something the business owes. Since it owes 6000 at the end of 1st year, and doesn't pay for 2nd and 3rd years also, this amount owing (6K +6K+6K) = 18 K figures as owing at the end of third year as no payment is made during the period. However, while the profit and loss for the year is made out, the dues for the particular period will be shown as an expense and the profit arrived at.
2007-08-04 11:12:24 · answer #2 · answered by wind 4 · 0⤊ 0⤋
Accrue 6000 each year.
2007-08-04 11:02:48 · answer #3 · answered by WilmaF 5 · 0⤊ 0⤋
At the end of year 3 it will be 18,000 ......6,000a year for 3 years.
2007-08-04 11:16:56 · answer #4 · answered by yappyishappy 3 · 0⤊ 0⤋
I think it will cumulate . Do give me thwe correct answer.
2007-08-04 11:05:36 · answer #5 · answered by dum 1 · 0⤊ 0⤋