CIMA BA3 · Chapter 9 · Question 2 of 10
During the year a business paid electricity bills of $4,860. At the start of the year there was an accrual for electricity of $520, and at the end of the year an accrual of $610 is required. What is the electricity expense for the year?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) $4,950
Explanation
Expense = cash paid - opening accrual + closing accrual = $4,860 - $520 + $610 = $4,950. The opening accrual relates to last year's electricity paid this year, so it is removed; the closing accrual is this year's usage not yet paid.
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