A business sublets part of its premises. During the year it received rent of $11,000 from its tenant. At the start of the year, rent received in advance was $1,500. At the end of the year, the tenant owed $2,000 of rent. What is the rental income for the year?

Correct answer: B) $14,500

Explanation

The opening rent received in advance ($1,500) was cash received last year for this year, so it is income of this year. The closing amount owed ($2,000) is accrued income earned this year but not yet received. Income = $11,000 + $1,500 + $2,000 = $14,500. Treating the opening balance as a deduction gives $11,500.