Pandar Ltd prepares accounts to the end of February each year. The accrual for electricity brought forward on 1 March 2019 was £1,000. The accountant estimates that electricity consumed in January and February 2020, but not billed until after the year end, would cost some £1,400. Cheques paid to the power supplier during the year ended 28 February 2020 totalled £13,300. With respect to the financial statements for the year ended 28 February 2020, which of the following statements is true?a) There will be a charge in the Income Statement of £1,400 and an accrual in the Statement of Financial Position of £13,700.b) There will be a charge in the Income Statement of £12,900 and an accrual in the Statement of Financial Position of £1,200.c) There will be a charge in the Income Statement of £13,700 and an accrual in the Statement of Financial Position of £2,400.d) There will be a charge in the Income Statement of £13,700 and an accrual in the Statement of Financial Position of £1,400.

As per the accrual concept income and expense should be recorded in the period for which it relates…

Answered: Pandar Ltd prepares accounts to the end…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Pandar Ltd prepares accounts to the end of February each year. The accrual for electricity brought forward on 1 March 2019 was £1,000. The accountant estimates that electricity consumed in January and February 2020, but not billed until after the year end, would cost some £1,400. Cheques paid to the power supplier during the year ended 28 February 2020 totalled £13,300. With respect to the financial statements for the year ended 28 February 2020, which of the following statements is true?

1. a) There will be a charge in the Income Statement of £1,400 and an accrual in the Statement of Financial Position of £13,700.
2. b) There will be a charge in the Income Statement of £12,900 and an accrual in the Statement of Financial Position of £1,200.
3. c) There will be a charge in the Income Statement of £13,700 and an accrual in the Statement of Financial Position of £2,400.
4. d) There will be a charge in the Income Statement of £13,700 and an accrual in the Statement of Financial Position of £1,400.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions