ICAEW AF · Chapter 8 · Question 9 of 9
The following information relates to a business's telephone costs for the year: Accrued call charges at start of year £280 Accrued call charges at end of year £340 Line rental prepaid at start of year £150 Line rental prepaid at end of year £175 Cash paid during the year £2,960 What is the telephone expense for the year?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) £2,995
Explanation
Expense = cash paid - opening accrual + closing accrual + opening prepayment - closing prepayment. = £2,960 - £280 + £340 + £150 - £175 = £2,995. The opening prepayment is an expense of this year paid last year, while the closing prepayment is paid now but relates to next year.
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