In the case of a firm which rents the premises from which it operates, a credit balance brought down on its rent payable account at a particular date means that, at that date, …
Select ONE answer:
- the firm owes rent.
- the firm has paid rent in advance.
- the firm has paid too much rent.
- the firm has paid too little rent.
Show your workings to arrive at your answer, and explain and justify your reasons:
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This multiple-choice question is suitable for Accounting KS5 classes.
The answer is 1
- Correct – A trial balance is a list of the balances brought down in the underlying ledger accounts. In a trial balance. credit balances represent income or liabilities whereas debit balances represent assets or expenses. In the case of rent payable, a credit balance represents a liability as rent payable cannot be income.
- Not correct
- Not correct
- Not correct
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