ICAEW AF · Chapter 8 · Question 2 of 9
At the start of the year, a business had an accrual for electricity of £420. During the year it paid electricity bills of £3,860. At the year end, electricity of £510 had been used but not yet billed. What is the electricity expense for the year?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) £3,950
Explanation
Part of the cash paid (£420) settles the previous year's accrued charge, so it is not an expense of this year. The unbilled usage of £510 must be added. Expense = £3,860 - £420 + £510 = £3,950.
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