Current liabilities Accrued rent 109

£

300 The trial balance of a firm whose financial year ends on 31 March 1990 contains the following item.

A/cs Wages

£ dr 30,000

£ cr Because the weekly wages were last made up on 26 March the amount of

£350 has accrued by 31 March. Make the necessary adjustments to the wages account and show the relevant entries in the final accounts for the year ended 31 March 1990.

Many examination questions require only the final accounts to be shown.

While you may decide to complete the ledger account adjustment as an aid to obtaining the correct answer, it is not absolutely necessary. The adjustment in the last exercise could be shown in the profit and loss account like this:

Profit and loss account year ended 31 March 1990 Expenses Wages add Accrual

£ £

30,000 350 30,350 The key point to keep in mind when deciding how the amount of an expense is to be shown in the profit and loss account is the date it is incurred. If the expense refers to, say, 1990, it must be included in that year's profit and loss account. If the full amount has not been paid in 1990 then the expense account must be adjusted to show the true expense for the period. Remember, however, to include any such adjustment for an expense outstanding in the balance sheet under the heading of current liabilities.