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WAEC Financial Accounting 2004 Question 42

Question 42

Accruals and Prepayments

Rent prepaid as at 1st January, 2002 was N10,000. Annual rent payable is N80,000 and rent accrued as at 31st December, 2002 was N15,000. How much was paid for rent in 2002?

  1. A.N80,000
  2. B.N75,000
  3. C.N55,000
  4. D.35,000
Show the answer and explanation

Answer: C (N55,000)

Explanation

Rent expense 80,000 = prepaid b/f 10,000 + cash paid + accrued 15,000, so cash paid = N55,000.