PRC-1 · Chapter 4 · Question 42 of 100
'Rapid Traders' pays rent quarterly. The annual rent was Rs. 240,000 but increased to Rs. 300,000 on 1 July. If the financial year ends on 31 December, what is the total rent expense to be charged to the statement of profit or loss?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Rs. 270,000
Explanation
The expense for the first 6 months (Jan-Jun) is Rs. 240,000 / 12 x 6 = Rs. 120,000. The expense for the last 6 months (Jul-Dec) is Rs. 300,000 / 12 x 6 = Rs. 150,000. Total = 120,000 + 150,000 = Rs. 270,000.
More Accruals and Prepayments MCQs
- Q44If the closing balance of a prepaid expense account is lower than its opening balance from the previous year, what does this…
- Q45In the 'Rent Expense' ledger account of 'Vertex Ltd' (using the single account system), the opening balance brought down (b/d) is on the…
- Q46A business paid Rs. 50,000 for the rent of the owner's personal residence and incorrectly charged it to the business's 'Rent Expense'…
- Q47'Tech Support Inc.' received a Rs. 240,000 cash payment for a 1-year maintenance contract starting on 1 October. Their financial year ends…
- Q48'Prime Builders' received an advance payment of Rs. 2 million for a large project. 60% of the work will be completed in the next 12…