Josh has been trading for one year as at 31 December 2024 and during that year he paid electricity bills amounting to £760. On 14 January 2025 he received an electricity bill for the three months to 31 December 2024 for £310. He eventually paid the bill on 31 January 2025. His accounts for the year ended 31 December 2024 should show:
A) A statement of profit or loss charge for electricity of £1,070 and an accrual of £310 on the statement of financial position.
B) A statement of profit or loss charge for electricity of £760 and an accrual of £310 on the statement of financial position.
C) A statement of profit or loss charge for electricity of £1,070 and a prepayment of £310 on the statement of financial position.
D) A statement of profit or loss charge for electricity of £760 and a prepayment of £310 on the statement of financial position.

Question

Quizplus · Accepted Answer

The total electricity expense for the year should include the £760 paid and the £310 accrued for the bill received after year-end, totaling £1,070. The £310 is an accrual because it relates to the period ending 31 December 2024 but was not paid until January 2025.

Josh Has Been Trading for One Year as at 31