ACCA AA · Chapter 11 · Question 8 of 12
Kestrel Co has a 31 December year end. Electricity is billed quarterly in arrears. The bill for the quarter ending 31 January, received in February, was $9,000. Assuming even usage, what accrual should be included at 31 December?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) $6,000
Explanation
The quarter to 31 January covers November, December and January. Two of those three months (November and December) fall in the year, so the accrual is $9,000 x 2/3 = $6,000. $3,000 accrues only one month and $9,000 wrongly accrues the full quarter.
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