PRC-1 · Chapter 4 · Question 61 of 100
A tenant pays an annual rent of Rs. 6,000. Payment is made quarterly in advance on 1 January, 1 April, 1 July, and 1 October. Which of the following should be included in his accounts for the year ended 31 October?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Rs. 1,000 Prepayment
Explanation
Quarterly rent is Rs. 1,500. The payment on 1 October covers October, November, and December. At the 31 October year-end, 2 months (November and December) are unused. 6000/12 = 500/month. 500 * 2 = Rs. 1,000 prepayment.
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