Accruals and Prepayments What are accruals? Accruals are those amounts of money which supposed to be paid by a certain period and are not yet paid. Accruals are notes that do not enter in the trial balance. Accruals are placed on the credit side of the balance sheet under the current liabilities in the case of expenses and on the debit side of the profit and loss, (if expense). For Example: Assume that water and …showed first 75 words of 833 total…

…showed last 75 words of 833 total…Cost (LM 22,000) - Estimated deposal Value (LM 2,000) = LM 20,000 Number of Years (4Yrs) 4 = LM 5,000 depreciation each year for four years If, after four years, the motor vehicle had no disposal value, the charge for depricaiation would have been : Cost (LM 22,000) = LM22,000 Numbers of Years use (4Yrs) 4 Yrs = LM 5,500 depreciation each for four years Reducing line method LM Cost10,000 First year: Depreciation (20%) 2,000 8,000 Second year: Deprecation (20% of 8,000) 1,600 6,400 Third Year: Depreciation (20% of 6,400) 1,280 Cost not yet apportioned, end of year 3 5,120