Question

Give effect of the following adjustment entry:
The accrued rent is Rs. 1,900.

• A. Rent A/c Dr. 1,900
  To Accrued Rent A/c 1,900
• B. Accrued Rent A/c Dr. 1,900
  To Rent A/c 1,900
• C. Accrued Rent A/c Dr. 1,900
  To Asset A/c 1,900
• D. None of the above

Answer 1

Answer: (B)

Accrued Rent A/c Dr. 1,900

To Rent A/c 1,900
It may happen that certain items of income such as interest on loan, commission, rent, etc. are earned during the accounting year but have not been actually received by the end of the year. Such incomes are known as accrued income. The adjustment entry for accrued income is:

Accrued Income A/c Dr.

To Concerned Income A/c

The amount of accrued income will be added to the related income in the profit and loss account and the new account of accrued income will appear on the asset side of the balance sheet.

The effect of adjustment entry for accrued rent of Rs. 1,900 is:

Accrued Rent A/c Dr. 1,900

To Rent A/c 1,900