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WAEC Financial Accounting 2007 Question 19

Question 19

Accruals and Prepayments

Rent receivable accrued 1/01/2005 D3,000
Rent received during the year 2005 D5,000
Rent receivable accrued 31/12/2005 D2,500
The entry for rent received in the profit and loss account for the year ended 31st December 2005 is

  1. A.credit profit and loss account with D4,500
  2. B.credit profit and loss account with D2,500
  3. C.debit profit and loss account with D2,500
  4. D.debit profit and loss account with D4,500.
Show the answer and explanation

Answer: A (credit profit and loss account with D4,500)

Explanation

Rent income = 5,000 − 3,000 + 2,500 = D4,500, and income is credited to profit and loss.