A trader prepares his accounts annually to 30 April. He pays annual rent of $12000 and makes the payments quarterly in advance on 1 Jan, 1 Apr, 1 July and 1 October. Which amount should be included in his accounts for the year ended 30 April 2011?

A. $1000 Accrual
B. $1000 Prepayment
C. $2000 Accrual
D. $2000 Prepayment

Question

A trader prepares his accounts annually to 30 April. He pays annual rent of $12000 and makes the payments quarterly in advance on 1 Jan, 1 Apr, 1 July and 1 October. Which amount should be included in his accounts for the year ended 30 April 2011?

A. $1000 Accrual
B. $1000 Prepayment
C. $2000 Accrual
D. $2000 Prepayment

anonymous · Answer

=12000/4 = 3000 this is the amount of his quarterly payments
year is May 2010 to Aprll 2011
= 12000/12 = 1000 monthly payment
Question states payments are made in Jan Apr July and Oct

When that April 2011 payment is made - that reflects 2 months of prepaid

anwaarullah · Answer

answer is A