A business receives rent from letting part of its premises.
On 1 January 2022, there was a balance brought forward of $1000 in the rent receivable account
in respect of one month's rent received in advance.
During the year ended 31 December 2022, the business received further amounts totalling
$13000 to cover the period from 1 February 2022 to 31 January 2023.
A rent increase of 10% was introduced from 1 April 2022.
The statement of profit or loss for the year ended 31 December 2022 incorrectly included an
amount of $13000 for rent receivable.
What was the effect of this error on the profit for the year?

Q: What topic does this question test?

This question tests Accruals and Prepayments in A-Level Accounting (syllabus code 9706). It is worth 1 mark.

Q: Which exam paper is this question from?

This question appeared in the Cambridge A-Level Accounting May/June 2023 examination, Paper 1 Variant 2 (9706_s23_qp_12.pdf).

Question

A business receives rent from letting part of its premises.
On 1 January 2022, there was a balance brought forward of $1000 in the rent receivable account
in respect of one month's rent received in advance.
During the year ended 31 December 2022, the business received further amounts totalling
$13000 to cover the period from 1 February 2022 to 31 January 2023.
A rent increase of 10% was introduced from 1 April 2022.
The statement of profit or loss for the year ended 31 December 2022 incorrectly included an
amount of $13000 for rent receivable.
What was the effect of this error on the profit for the year?

Oracle Prep · Accepted Answer

The correct answer is A: $100 overstated.

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