Accounting - Accounting time lines

Accounting time lines

The following strategy is useful when dealing with balance day adjustments
such as depreciation.

Accounting time lines

It is often the case that the time line given for the exercise or report
does not match that of the financial year. This will mean that balance day
adjustments, in particular depreciation, prepaid and accrued items, need to
be matched against the actual reporting period.

Step 1 Draw a time line for the financial year.
2 Draw the time line for the actual reporting period.
3 Write the number of months below the second time line.
4 If dealing with depreciation the number of months over 12 is what you need to calculate depreciation for.
5 For accrued or prepared items draw a further time line representing the time accrued or prepaid. For example, if the actual reporting period is 3 months and an expense item has been paid for 4 months draw that line under the 3 month line.


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