PRC-1 · Chapter 4 · Question 72 of 100
A company pays rent quarterly in arrears on 1 Jan, 1 Apr, 1 Jul, and 1 Oct. The rent increased from Rs. 90,000/year to Rs. 120,000/year starting 1 October 2012. What is the rent accrual at 31 December 2012?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 30,000
Explanation
Because rent is paid in arrears, the 1 January payment covers the preceding Oct-Dec quarter. At 31 Dec, that quarter is unpaid. The new rate is 120,000/year. 120,000 x (3/12) = Rs. 30,000.
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