J
jac398
Member
Just looking through this chapter at the moment.
Why is the advertising paid in advance for next year of £9000 removed from the advertising costs in the income statement, which in effect makes the net profit higher for the year as it is treated as a credit? As it is for next year, shouldnt it be ignored, or if not then just included by making profit less for the year by adding it in, and thus treating it as a debit?
Also, why therefore is the provision (not yet paid) for admin expenses owing at the end of the year taken as a cost in this years income statement?
I'm getting confused with the treatment of these two elements.
Thanks in advance
Why is the advertising paid in advance for next year of £9000 removed from the advertising costs in the income statement, which in effect makes the net profit higher for the year as it is treated as a credit? As it is for next year, shouldnt it be ignored, or if not then just included by making profit less for the year by adding it in, and thus treating it as a debit?
Also, why therefore is the provision (not yet paid) for admin expenses owing at the end of the year taken as a cost in this years income statement?
I'm getting confused with the treatment of these two elements.
Thanks in advance