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JAMB Principles of Accounts 2005 Question 12

Question 12

Final Accounts of a Sole Trader

A rent received by a trader for sub-letting part of his business premises should be added to the

  1. A.gross profit
  2. B.total profit
  3. C.net profit
  4. D.total revenue
Show the answer and explanation

Answer: A (gross profit)

Explanation

Rent received is other income, so it is added to gross profit in the profit and loss account before expenses are deducted.