Accounting 9706 · AS & A Level · Preparation of financial statements

Preparation of financial statements — practice question

On 1 January 2024, a sole trader let out part of his business office for $\$500$ each month for 24 months. In the year ended 31 December 2024, he was paid the following amounts: • rent of $\$5500$ • rent deposit of $\$500$ refundable at the end of month 24. Which amounts should be included in the statement of financial position at 31 December 2024?

  • Acurrent assets: nil; current liabilities: $\$500$
  • Bcurrent assets: $\$500$; current liabilities: nil
  • Ccurrent assets: $\$500$; current liabilities: $\$500$
  • Dcurrent assets: $\$1000$; current liabilities: nil

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