Day: December 12, 2019

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:

1. the firm owes rent.
2. the firm has paid rent in advance.
3. the firm has paid too much rent.
4. 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

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.
2. Not correct
3. Not correct
4. Not correct

 

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