Question 1

**Section A**

Vertex Consulting pays its annual office rent of $24,000 in advance on 1 April each year. The company's financial year-end is 31 December.

What is the correct adjustment required in the financial statements for the year ended 31 December 20X2?

Accepted Answer

Determine the period the payment covers. Calculate how many months fall after the financial year-end. Multiply the monthly rent by this number of months to find the prepayment.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Calculating the expense for the year ($18,000) and labeling it as the prepayment.

Section A

Vertex Consulting pays its annual office rent of $24,000 in advance on 1 April each year. The company's financial year-end is 31 December.

What is the correct adjustment required in the financial statements for the year ended 31 December 20X2?

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 1

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