Other Receivables

Prepaid income.
 Lesson objectives
• By the end of the lesson the learner should be able to:

• Prepare ledger accounts and journal entries to record prepaid

income.
 Prepaid income

• This happens when a customer has not received a good or

service by the end of the financial year but has already paid
for it.
• Due to the matching principle only that income receivable
during the year should be included in the income statement.
• Prepaid income received in advance for the next year should
not be included in the income statement otherwise profit
will be overstated.
 Stationery account
• The inventory of stationery at the start of an accounting
period is entered in the stationery account on the debit
side as a balance b/d from the previous accounting
period.
• This is because the benefit from the inventory that has
already been paid for will be received not in the year it
was paid for, but in the following year.