can anyone tell me the double entry for prepayments and accruals?
u mean this?
_________ accrued expenses _______________
Date $ Date $
Bal b/d x Profit and Loss x+y
Bal c/d
(accrued y
expenses)
(total) (total)
Bal b/d y
For prepaid expenses, the bal c/d (prepaid exp) will be below "profit and loss". As the expense is not yet incurred (used), it will be at the credit side instead.
The accrual concept: " Expenses are taken into account when they are incurred and revenues are done so when they are earned (money isnt necessarily received)"
Revenues are credit nature so the bal b/d before adjustments is at the credit side. Similarly, the bal c/d (accrued revenue, earned but money not received) will be below it.