PRC-1 · Chapter 4 · Question 6 of 100
'Zenith Properties' received two years of rent amounting to Rs. 600,000 in advance on 1 April. If the financial year ends on 31 December, what is the total unearned rental income liability at the year-end?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 375,000
Explanation
The total rent is for 24 months, making it Rs. 25,000 per month. From 1 April to 31 December is 9 months, so Rs. 225,000 is earned. The remaining amount (600,000 - 225,000 = Rs. 375,000) is unearned.
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