Multiple choice

If the rent received is Rs. 4,500 and 2/5th of that is received in advance for the next year, how much rent would be shown in the balance sheet and on which side?

  1. Rs. 1,000 in liabilities side

  2. Rs. 1,800 in asset side

  3. Rs. 1,800 in liabilities side

  4. None of these

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

 As mentioned earlier, it would be shown in the liabilities side as it is the income received in advance for the next year.  2/5 X 4,500 = 1,800.