CA Foundation Accounting Practice Questions - ICAI CA Foundation Paper 1 Accounting Exam

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Under the accrual concept, rent of 12,000 paid for the year but covering 3 months of the next accounting period should be treated in the current year as:

Full 12,000 expense with no adjustment 3,000 expense and 9,000 prepaid expense 12,000 expense and 3,000 outstanding liability 9,000 expense and 3,000 prepaid expense (asset)

Correct Answer:

9,000 expense and 3,000 prepaid expense (asset)

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