CA Foundation · Accounting · Theoretical Framework
Anand Traders paid ₹36,000 on 1 January 2025 as rent for the 12 months from 1 January 2025 to 31 December 2025. Accounts are closed on 31 March 2025. Under the matching concept, what amount of rent is charged to the Profit and Loss Account for the year ended 31 March 2025?
The rent charged is ₹9,000. Monthly rent is ₹3,000 and only three months, January to March 2025, relate to the year. The balance of ₹27,000 is carried forward as prepaid rent, in line with the matching concept.
- A₹36,000
- B₹27,000
- C₹9,000Correct
- D₹3,000
Explanation
Monthly rent is 36,000/12 = ₹3,000. Only January, February and March fall in the year, so 3 months × 3,000 = ₹9,000 is charged. The remaining ₹27,000 is prepaid rent. Choosing ₹36,000 follows the cash basis, ignoring matching.
Did you get it right without looking?
One question tells you little. A timed set on Theoretical Framework shows your real accuracy, how long you take and where you lose marks.
More Theoretical Framework questions
- Verma Traders changes its method of charging depreciation from straight line to written down value every year to suit the profit it wants to…
- Arun Enterprises purchased furniture worth ₹40,000 on credit from Bharat Furnishers. What is the effect of this transaction on the accountin…
- Pooja Stores buys a waste paper bin for ₹150 which will last several years, and charges it fully to expenses in the year of purchase instead…
- Ind AS (Indian Accounting Standards) are best described as standards that:
- Rao & Co. started the year with assets of ₹9,00,000 and liabilities of ₹3,00,000. During the year the owner introduced additional capital of…
- Iyer Traders has 400 units of an item in stock at year-end. Cost per unit is ₹120 and the net realisable value per unit is ₹105. Under the c…