PRC-1 · Chapter 4 · Question 70 of 100
An entity pays rent of Rs. 600,000 for six months in advance on 1 October. The financial year ends on 31 December. What is the value of prepaid rent?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 300,000
Explanation
The payment covers October to March (6 months). At 31 December, 3 months (January to March) are unexpired. Rs. 600,000 x (3/6) = Rs. 300,000.
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