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Zorluk: OrtaAccrued and Prepaid Income

A trader received ₦120,000₦120,000 cash as rent from subletting part of his warehouse during the financial year ended 31 December 2025. On 1 January 2025, rent received in advance was ₦15,000₦15,000. At 31 December 2025, rent accrued was ₦18,000₦18,000 while rent received in advance was ₦10,000₦10,000. What is the amount of rent income to be credited to the Profit and Loss Account for the year?

  1. ₦143,000₦143,000Cevap
  2. B
    ₦128,000₦128,000
  3. C
    ₦107,000₦107,000
  4. D
    ��97,000��97,000

Cevap

₦143,000₦143,000 is credited to the Profit and Loss Account.
Under the accruals concept, income credited to the Profit and Loss Account must reflect income earned during the accounting period, regardless of when cash is received. Opening rent received in advance (₦15,000₦15,000) relates to the current year and is added. Closing accrued rent (₦18,000₦18,000) was earned in the current year and is added. Closing rent received in advance (₦10,000₦10,000) belongs to the next period and is deducted. Therefore, ₦120,000+₦15,000+₦18,000−₦10,000=₦143,000₦120,000 + ₦15,000 + ₦18,000 - ₦10,000 = ₦143,000.

Adım Adım Çözüm

1
Identify the base cash received during the financial year.
Cash received = ₦120,000₦120,000
This is the total cash collected for rent during the accounting period.
2
Add income earned in the current period (opening prepaid income and closing accrued income).
Add opening prepaid income (₦15,000₦15,000) + closing accrued income (₦18,000₦18,000) = + ₦33,000₦33,000
Rent received in advance at the start of the year was earned this year, and rent accrued at year-end was earned this year but not yet received.
3
Deduct income received in advance at year-end.
Deduct closing prepaid income = - ₦10,000₦10,000
Rent received in advance at year-end belongs to the subsequent financial year and must be excluded under the accruals concept.
4
Compute total Rent Income for the Profit and Loss Account.
₦120,000+₦15,000+₦18,000−₦10,000=₦143,000₦120,000 + ₦15,000 + ₦18,000 - ₦10,000 = ₦143,000
This represents the exact total income earned for the financial year.

Anahtar Kavram

Accrued and Prepaid Income Adjustment
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Konular

Accrued and Prepaid Income

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