2025 · Q85
Which one of the following will be the adjustment journal entry if the rent received in advance is ₹2,000?
General Accounting Principles, Auditing and InsuranceCapital and revenue expenditure
- ADebit profit and loss account and Credit rent account
- BDebit rent received account and Credit rent received in advance account
- CDebit rent received in advance account and Credit rent received account
- DDebit rent account and Credit profit and loss account
Explanation
Rent received in advance is unearned income: the rent account was credited when received, so the unearned portion of Rs 2,000 must be deferred by debiting Rent Received Account and crediting Rent Received in Advance Account. The reverse entry would recognise income prematurely.