ACCA FA · Chapter 7 · Question 2 of 12
At 1 January 20X5 a business had an accrual for electricity of $1,400. During 20X5 it paid electricity bills totalling $8,600. In February 20X6 it received a bill of $2,700 for the three months ended 28 February 20X6. What is the electricity expense for the year ended 31 December 20X5?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) $8,100
Explanation
The closing accrual is for December 20X5 only: $2,700 x 1/3 = $900. Expense = payments $8,600 - opening accrual $1,400 + closing accrual $900 = $8,100. Adding the opening accrual instead of deducting it gives $10,900, and accruing the whole bill gives $9,900.
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