I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

liability. 

Prepayments

 are payments which have been made in one accounting period, but should not be 

charged against profit until a later period, because they relate to that later period. They are shown in the 

statement of financial position as an asset.  

 

1.1.1 Difference between accruals and trade payables 

You will notice that accruals and trade payables are separate balances within liabilities on a statement 

of financial position. 

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CHAPTER 10  

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  ACCRUALS AND PREPAYMENTS 

 

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Accruals generally represent liabilities to pay for goods or services that have been received in a period, 

but that have not yet been invoiced for by the suppliers. Although most accrued expenses are for 

purchases of goods or services from suppliers, accruals can cover all types of expense, eg bonuses for 

the year ended 20X4 paid to staff in 20X5, should be accrued for in 20X4.  

Trade payables are liabilities to pay for goods or services received in a period that have been invoiced