Acca financial Accounting (FA) Study Text ac ca (FA)

Accruals and prepayments 

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KAPLAN PUBLISHING

 

 

Illustration 3 – Accrued income 

 

A business earns bank interest income of $300 per month. $3,000 bank 

interest income has been received in the year to 31 December 20X5. 

What is the year-end asset and what is the bank interest income 

for the year? 

Show the relevant entries in the ledger accounts.

 

 

 

Solution to Illustration 3 

 

•

 

The total amount credited to the statement of profit or loss in 

respect of interest should be $3,600 (12 × $300). 

•

 

The year-end accrued income asset is the $600 that has not yet 

been received. 

The accounting entries required are: 

Dr Accrued income (SFP) $600 

Cr Bank interest income (P/L) $600