Syllabus Edition
First teaching 2025
First exams 2027
Amount Due & Amount Paid/Received (Cambridge (CIE) IGCSE Accounting): Revision Note
Exam code: 0452 & 0985
Amount due & amount paid/received
Can the amount due and the amount paid or received be different?
The amount due is the amount that is owed for the financial period
This is the amount that gets transferred to the statement of profit or loss
The actual amount paid (for an expense) or received (from an income) can be different
An underpayment results in an accrual
An overpayment results in a prepayment
You might be given one of these amounts and asked to find the other
How do I calculate amount due for the year?
STEP 1
Start with the amount that has been paid or received during the current financial periodSTEP 2
Deal with any amounts carried over from the previous financial periodSubtract the amount if it is an accrual
Because this amount was not due in the current period
It was due in the previous period
Add the amount if it is a prepayment
Because this amount is due in the current period
STEP 3
Deal with any amounts that will be carried over to the next financial periodAdd the amount if it is an accrual
Because this amount is due in the current period
Subtract the amount if it is a prepayment
Because this amount is not due in the current period
It will be due in the next period
Examiner Tips and Tricks
For every value in the question, ask yourself "when is this amount due: last year, this year or next year?".
If it is due this year, then add the amount. Otherwise, subtract the amount. This is true for expenses and incomes.
Worked Example
Hannah's financial years ends 31 March.
During the year ending 31 March 2024, Hannah received $4 000 rent from her tenants.
The following information is available:
$ | ||
At 31 March 2023 | Rent received in advance | 400 |
At 31 March 2024 | Rent in arrears | 300 |
Calculate the amount of rent that Hannah should post to the statement of profit or loss for the year ending 31 March 2024.
Answer:
Start with the amount that Hannah received during the year
There was a prepayment at the start of the year
add this amount as it was due for this current year
There was an accrual at the end of the year
add this amount as it was due for this current year
$4 000 + $400 + $350 = $4 700
How do I calculate the amount paid for an expense within a financial period?
STEP 1
Start with the amount that is due for the current financial periodSTEP 2
Deal with any amounts carried over from the previous financial periodAdd the amount if it is an accrual
Because this should have been paid or received in the current period
Subtract the amount if it is a prepayment
Because this was not paid or received in the current period
It was paid or received in the previous period
STEP 3
Deal with any amounts that will be carried over to the next financial periodSubtract the amount if it is an accrual
Because this has not been paid or received during the current period
It will be paid or received in the next period
Add the amount if it is a prepayment
Because this was also paid or received during the current period
Examiner Tips and Tricks
This method is the reverse of the finding the amount that is due.
Try to understand the logic behind the two methods above rather than memorising them.
If you need to find the amount to include on the statement of profit or loss, then consider which amounts are due in the current financial period.
If you need to find the amount that has been paid, then consider which amounts were paid during the current financial period.
Worked Example
Garry is charged $4 200 each year for commission. At the start of the financial year, Garry was in arrears of $700 for commission. At the end of the financial year, Garry owed three months’ commission.
How much did Garry pay for commission during the financial year?
Answer:
Find the accrual at the end of the year
STEP 1: Divide the yearly charge by 12 to get the monthly charge
$4 200 ÷ 12 = $350
STEP 2: Multiply it by 3 to find the accrual at the end of the year
$350 × 3 = $1 050
Deal with the accruals at the start and end of the year
Garry started the year with an accrual
so he also needed to pay that amount during the year
add this to the yearly charge
Garry ended the year with an accrual
so he had not paid that during the year
subtract this from the yearly charge
$4 200 + $700 - $1 050 = $3 850
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