Benefits in Lent (Week 2) – Accruals Concept
It’s near the end of the week and I have £12.57 left to spend at the Korean restaurant birthday dinner tonight. It has been quite easy this week because I still enjoy the use of my existing stock of possessions and food. This doesn’t cost me any money.
Essentially, I am still living a middle class lifestyle that is far beyond someone on benefits. A fair way to take account of it is the use of accruals accounting. In short, goods and services are accounted for as they are used instead of when they are paid for. For example, I bought three boxes of cereal before the challenge started. Under cash accounting, I can ignore this. Under accruals accounting, I have to account for the one box of cereal I ate during the week.
More information on accruals accounting can be found in paragraph 22 of the IFRS manual.
List of Adjustments
- To account for the consumption of the existing food in my fridge and freezer. Including free food given by my parents
- Benefits in Lents does not take account of Oyster card costs because they are assumed necessary for work, however, there’s no adjustment for non-work travel.
- To account for use of existing household products, such as my bed, sofa and toothpaste.
- Existing use of laptop and TV, assuming an estimated useful life of 3 years.
- To account for free beer and sandwiches consumed at a work event.
- To account for clothes worn, assuming a useful life of 2.5 years.
- Existing use of guitar, piano and the reading of 3 chapters of book. Estimated useful life of 10 years. The book cost £2 and has a total of 14 chapters.
Notwithstanding the disturbing fact that this looks like a spreadsheet at work, I am now over budget by £22.77. This shows that I already have good wealth and income doesn’t matter so much. Those on benefits don’t have such wealth, and need to borrow at extortionate rates to fund a basic lifestyle.
No kimchi for me tonight.