PRC-1 · Chapter 4 · Question 16 of 100
A company pays rent quarterly in advance on 1 Jan, 1 Apr, 1 Jul, and 1 Oct. The annual rent was Rs. 120,000 but increased to Rs. 160,000 on 1 October. If the financial year ends on 31 December, what is the total rent expense for the year?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Rs. 130,000
Explanation
The expense for the first 9 months (Jan-Sep) is Rs. 120,000 / 12 x 9 = Rs. 90,000. The expense for the final 3 months (Oct-Dec) is Rs. 160,000 / 12 x 3 = Rs. 40,000. Total expense = 90,000 + 40,000 = Rs. 130,000.
More Accruals and Prepayments MCQs
- Q18A company receives a one-year maintenance contract fee in advance. Which of the following accounting terms is NOT an appropriate…
- Q19An accrued income of Rs. 40,000 was mistakenly recorded in the books as unearned income of Rs. 40,000. What is the impact on the net…
- Q20In financial accounting terminology, the term 'Outstanding Expenses' strictly refers to:
- Q21Total assets will be incorrectly overstated if an accountant completely omits the year-end adjustment for which of the following?
- Q22How does the economic benefit of an asset like 'Prepaid Rent' typically expire and convert into an expense over the accounting period?