ICAEW AF · Chapter 8 · Question 3 of 9
A business sublets part of its premises for £600 per month. At the start of the year, the tenant owed £1,200 of rent. During the year the business received £7,800 from the tenant. What balance relating to rent receivable is shown in the statement of financial position at the end of the year?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) £600 receivable (current asset)
Explanation
Rental income for the year = 12 x £600 = £7,200. Opening receivable £1,200 + income £7,200 - cash received £7,800 = £600. The balance is positive, so the tenant still owes £600 at the year end, which is accrued income, a current asset.
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