Accounting Online Program Certification Practice Test

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Prepare for the Accounting Online Program Certification Test. Use flashcards and multiple choice questions with detailed explanations. Ace your accounting certification exam with confidence!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

What figure should be included as the rent expense in the statement of profit or loss for the year ended 31 July 20X4?

£60,000
£70,000
£72,000
£68,000

The correct answer is: £70,000

To determine the correct rent expense to be included in the statement of profit or loss for the year ended 31 July 20X4, it's important to consider how rental expenses are typically accounted for within the period. Rent expenses should reflect the total amount that was incurred during the financial year, regardless of when the cash was actually paid. This means any prepayments or accrued rent not yet paid needs to be accurately captured to reflect the expenses for the year. In this scenario, if the correct rent expense is identified as £70,000, it likely includes both the regular rent payment due and any adjustments for rent that may have accrued or deferred during the accounting period. For example, if there was an increase in rent in the middle of the year or if the company had prepaid some rent for the subsequent period, these adjustments must be taken into account. This figure correctly matches the total obligations of the company regarding rental costs during that specified timeframe, ensuring that comprehensive accounting principles are adhered to by accurately reflecting the financial situation in the profit or loss statement.