Cash rent paid during the year is Rs. 72,000. Rent prepaid is Rs. 8,000 at the beginning and Rs. 11,000 at the end. What rent expense should be charged for the year?
Correct answer: A. Rs. 69,000
- A. Rs. 69,000
- B. Rs. 75,000
- C. Rs. 83,000
- D. Rs. 91,000
Explanation
Rent expense equals cash paid plus opening prepaid rent minus closing prepaid rent. Thus, Rs. 72,000 + Rs. 8,000 - Rs. 11,000 equals Rs. 69,000. The closing prepaid amount relates to the next accounting period.
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About Incomplete Records
Incomplete records require profit and financial position to be reconstructed when a complete double-entry system is unavailable. Methods include statements of affairs, capital comparisons, control accounts, cash summaries and margin calculations to find missing sales, purchases, expenses, assets, liabilities and drawings, while distinguishing business profit from changes in capital.
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