Principles of Accounting chapter guide

Year-end adjustments that students confuse

You can name every adjustment, yet accrued and prepaid still swap places in your answers.

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Four pairs of year-end adjustments are easy to swap in SPM Accounting answers. They are accrued and prepaid expenses, depreciation expense and accumulated depreciation, bad debts and the allowance, and the income statement effect against the statement of financial position effect.

This page is part of SPM Accounting adjustments. Each pair below has its own short lesson, and the set ends with a practice page.

What is the one question that separates each pair?

Each confusion has a single question that settles it.

Pair	The question to ask
Accrued or prepaid	Did the service come before the cash, or the cash before the service?
Depreciation expense or accumulated depreciation	Is this the amount for one year, or the total since purchase?
Bad debt or allowance	Has the business decided this debt is lost, or is it only an estimate?
Income statement or statement of financial position	Does the amount belong to this year’s profit, or is it a balance carried forward?

A small example of one payment treated two ways

Kedai Suria pays RM1 200 for a shop licence on 1 November for 12 months. The year ends on 31 December.

Two months have been used, so RM200 is the expense for this year. The other 10 months are still ahead, so RM1 000 is a prepayment. The same payment therefore lands in both statements, which is exactly why the adjustment exists.

Where should you start?

Begin with the pair that cost you marks most recently. If you are not sure, go in this order.

Then test yourself with the original integrated practice. If you want to log which pair keeps catching you, the mistake log and paper-error review helps you spot the pattern.

When is extra help worth considering?

If the same pair swaps after you have read the lesson and redone the questions, the gap is usually in the reasoning rather than the arithmetic. A teacher can ask you to explain each entry aloud and stop at the exact point the reasoning bends.

That is how online one-to-one Accounting tuition works, and it begins with a one-hour trial class (from RM50), with the fee agreed before you book.

Lesson

Practice

PracticeMixed year-end adjustments practiceYou have studied each adjustment alone and now want them mixed together.

Tools for this page

Common questions

Which adjustments do students confuse most?

Accrued and prepaid expenses swap often because both involve a payment date that differs from the usage date. Depreciation expense is also mixed up with accumulated depreciation. Allowance for doubtful debts gets confused with bad debts, since both relate to customers who do not pay.

What is the quickest way to tell accrued from prepaid?

Ask whether the service came before the cash or the cash came before the service. Service first, cash later is an accrual and a liability. Cash first, service later is a prepayment and an asset.

In what order should I study these pages?

Start with the accrued and prepaid timeline, then depreciation, then the allowance calculation. Finish with how one adjustment affects both statements, and then try the practice set. Each page builds on the one before it.

Keep going

If the same adjustment pairs keep swapping in your answers, one-to-one Accounting lessons let a teacher ask why each entry is needed and correct the reasoning, not only the figures.

Online one-to-one lessons for your child with an experienced teacher.
Your first class is a one-hour trial, from RM50. The fee is agreed before you book.
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