ICAEW ARF · Chapter 8 · Question 12 of 12
A company's year end is 31 December. Its last electricity bill covered the period up to 31 October. The next quarterly bill, received in February, was £9,600 for the three months from 1 November to 31 January. What accrual should be recognised at 31 December?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) £6,400
Explanation
Two of the three months covered by the bill (November and December) fall within the year. Accrual = £9,600 x 2/3 = £6,400. £9,600 would accrue the whole quarter including January, £3,200 is only one month, and £6,000 would be two-thirds of an estimate of £9,000 rather than the actual bill.
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