Prepaid Income and Expenses in the Accounting Systems of Hungary and Ukraine

Abstract

The article is dedicated to the study of the theoretical foundations and practical representation of revenues and expenses of future periods in the accounting systems of Hungary and Ukraine. The accrual principle is one of the fundamental pillars of accounting, designed to ensure that the financial effects of economic events are recognized in the period to which they economically relate, regardless of the actual timing of cash flows. This research investigates how this principle is implemented in practice in the two countries. In Hungary, the treatment of accruals and deferrals is governed by Act C of 2000 on Accounting, which provides a clear legal framework while also allowing businesses the flexibility to develop their own accounting policies. In contrast, Ukrainian accounting operates within a state-regulated framework, utilizing a fixed chart of accounts that ensures standardization but offers less flexibility for accommodating enterprise-specific characteristics. Furthermore, accounting standards in Ukraine are regulated by the NP(S)A (National Accounting Standards), which are based on IFRS but are not fully aligned with them. The study uses practical examples—particularly the accounting treatment of lease payments—to illustrate the logic behind the recording of accrued income and prepaid expenses, the application of related accounts, and the proportionate recognition of revenues and expenses over time. In the Hungarian system, accounts 391 and 392 are typically used for accrued income, whereas in Ukraine, similar account numbers are applied within a different regulatory framework. With regard to prepaid expenses, accounts 481 and 482 are used in Hungary, while in Ukraine, accounts 47 and 69 serve this purpose. The documentation of accruals and deferrals also differs between the two countries, including in areas such as analytical records and reporting obligations. The study highlights that, while the theoretical foundations of the two systems are similar, there are significant differences in their practical application and administrative environments. Ukraine is moving closer to the mandatory adoption of international standards (IFRS), whereas in Hungary, IFRS is an optional framework, typically applied by publicly listed or foreign-owned companies. These differences influence the methodology of accruals and deferrals, their impact on the income statement, and the overall comparability of financial information.