Question : Rent received Rs 3,500 and rent credited to Income and Expenditure Account is Rs 4,000, where would the difference be transferred?
Option 1: outstanding Rent Rs 500 shown on the liabilities side of balance sheet
Option 2: outstanding Rent Rs 500 shown on the assets side of balance sheet
Option 3: Rs 500 Rent received in advance shown on the liabilities side of balance sheet
Option 4: Rs 500 paid in advance shown on the assets side of balane sheet
Correct Answer: outstanding Rent Rs 500 shown on the assets side of balance sheet
Solution :
Rent credited to Income and Expenditure Account = Rs 4,000
(-) Rent received =
(Rs 3,500)
Closing balance in Balance Sheet =
Rs.500
Hence, the correct option is 2.
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