ACCA FA Practice Test

ACCA FA Accruals, Prepayments, Receivables & Payables Practice Questions

Accruals, Prepayments, Receivables & Payables makes up 6 of every 50 questions on a Tigertest ACCA FA practice test. Here are 10 of the 24 questions on it, each with the answer and the reason.

Updated 2026-11-10 by the Tigertest team. Based on ACCA's FA syllabus and study guide for 2026-27, with IFRS 18 formats. Original Section A style questions; Section B not included. Not affiliated with ACCA.

1. 1. Rent of $4,800 a quarter is paid in advance on 1 February, 1 May, 1 August and 1 November. The year end is 31 December. The prepayment at the year end is:

   • A.$19,200
   • B.$1,600
   • C.$3,200
   • D.$4,800

   Answer: B. The 1 November payment covers November, December and January. January's rent, $4,800 / 3 = $1,600, belongs to next year and is a prepayment.

2. 2. Electricity bills paid in the year totalled $8,640 and covered 1 December last year to 30 November this year. There was an opening accrual of $690 for last December. The bill for December to February, received after the year end, is $2,370. The electricity expense for the year is:

   • A.$9,430
   • B.$7,950
   • C.$10,320
   • D.$8,740

   Answer: D. Expense = cash paid $8,640 - opening accrual $690 + closing accrual for December ($2,370 / 3 = $790) = $8,740. Accruing the whole bill gives $10,320.

3. 3. A business sublets office space and has earned $1,350 of rent for December that the tenant will pay in January. At the year end this amount is:

   • A.Accrued income, a current asset
   • B.A prepaid expense, an asset
   • C.Deferred income, a liability
   • D.An accrued expense, a liability

   Answer: A. Income earned but not yet received is accrued income: Dr Accrued income, Cr Rental income. It is a current asset, like a receivable.

4. 4. A customer pays $9,600 on 1 October for a 12-month maintenance contract. The year end is 31 December. Deferred income at the year end is:

   • A.$9,600
   • B.$0
   • C.$7,200
   • D.$2,400

   Answer: C. Three months of service have been given, so $2,400 is revenue. The other nine months, $7,200, are still owed to the customer and shown as deferred income, a liability.

5. 5. A business forgets to record an accrual of $1,100 for unpaid wages at the year end. The effect is:

   • A.Profit overstated, assets understated
   • B.Only the SOFP is affected
   • C.Profit overstated, liabilities understated
   • D.Profit understated, liabilities overstated

   Answer: C. The wages expense is $1,100 too low, so profit is too high, and the accrual (a current liability) is missing from the statement of financial position.

6. 6. An accrual made at the end of last year is reversed on the first day of this year. The reversing entry is:

   • A.Dr Accruals, Cr Expense
   • B.Dr Prepayments, Cr Expense
   • C.Dr Accruals, Cr Bank
   • D.Dr Expense, Cr Accruals

   Answer: A. Reversing clears the liability and leaves a credit in the expense account. When the bill is paid and debited to the expense, only this year's share remains as a charge.

7. 7. At the year end, the adjustment for prepaid insurance is:

   • A.Dr Prepayments, Cr Bank
   • B.Dr Insurance expense, Cr Prepayments
   • C.Dr Accruals, Cr Insurance expense
   • D.Dr Prepayments, Cr Insurance expense

   Answer: D. The part paid for next year is moved out of this year's expense into a current asset. The bank was credited when the premium was paid.

8. 8. A business's year ends on 31 December. Its annual insurance runs from 1 April. It paid $6,000 for the year to 31 March this year, and $7,200 on 1 April for the year to next 31 March. The insurance expense for the year is:

   • A.$8,700
   • B.$6,900
   • C.$7,200
   • D.$5,400

   Answer: B. January to March uses the old premium: $6,000 x 3/12 = $1,500. April to December uses the new one: $7,200 x 9/12 = $5,400. Total $6,900, with $1,800 prepaid at the year end.

9. 9. The entry to write off an irrecoverable debt is:

   • A.Dr Irrecoverable debts, Cr Revenue
   • B.Dr Irrecoverable debts, Cr Receivables
   • C.Dr Receivables, Cr Irrecoverable debts
   • D.Dr Allowance, Cr Irrecoverable debts

   Answer: B. The debt is removed from receivables and the loss is charged to the irrecoverable debts expense. Revenue is not reduced, as the sale did happen.

10. 10. A debt of $640 written off last year is unexpectedly paid in full by the customer. The entry is:

    • A.Dr Bank, Cr Allowance for receivables
    • B.Dr Receivables, Cr Bank
    • C.Dr Bank, Cr Revenue
    • D.Dr Bank, Cr Irrecoverable debts

    Answer: D. The debt was removed from receivables last year, so the cash is credited to the irrecoverable debts expense account, reducing this year's charge. It is not new revenue.