This week’s topics
Adjustments to financial statements: accruals, prepayments and interest
- Starting point: simple and compound interest
- Accruals and prepayments
- Interest adjustments
What you will be able to do
- 2.4 Apply techniques to make adjustments to financial statements.
Activity
Start with this week’s 2 videos, then discuss how they apply to this week’s topic and note one example from a real business.
Study materials
Videos
- Simple and compound interest · Oak National Academy, Key Stage 4 (GCSE level) · for registered students
- Compound interest calculations · Oak National Academy, Key Stage 4 (GCSE level) · for registered students
Further resources
- Contemporary Mathematics, ch. 6.3–6.4: Simple and compound interest · PDF · OpenStax (2023), sections 6.3–6.4 with worked interest calculations; pp. 566–588 · for registered students
- Principles of Accounting Vol. 1, ch. 4.1–4.2: Accruals, prepayments and adjusting entries · PDF · OpenStax (2019), sections 4.1–4.2 on revenue and expense recognition, accruals and prepaid (deferred) items; pp. 190–203 · for registered students
- From Cash to Accrual Budgeting and Accounting in the Public Sector: The Dutch Experience · Open-access article · van der Hoek (2005), Public Budgeting & Finance. Clear case for recording revenue and expenses when earned or incurred (accruals) rather than when cash moves. · for registered students
- Financial Literacy Around the World: An Overview · Open-access article · Lusardi & Mitchell (2011), Journal of Pension Economics and Finance. Uses simple interest, compound interest and inflation questions to test adults worldwide. · for registered students
Materials marked “for registered students” open in the student portal, which is set up as soon as you receive final acceptance.
