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Can anyone help me with these doubts
In Illustration 7 of chapter 7 of accounts (7.41)
Why the rent received wasn't taken into b/s? Is it already included in the balance of cash as on 31st march? Was it actually an adjustment?
Also why expenses payable wasn't included in the b/s?
In Illustration 7 of chapter 7 of accounts (7.41)
Why the rent received wasn't taken into b/s? Is it already included in the balance of cash as on 31st march? Was it actually an adjustment?
Also why expenses payable wasn't included in the b/s?
Most Upvoted Answer
Can anyone help me with these doubts In Illustration 7 of chapter 7 of...
Understanding Rent Received and Balance Sheet Treatment
When analyzing Illustration 7 of Chapter 7 in accounts (7.41), it's essential to clarify why the rent received and expenses payable were treated the way they were in the balance sheet (b/s).
Rent Received Treatment
- The rent received is generally recorded in the cash balance as it contributes to the cash flow.
- As of 31st March, this rent is likely already included in the cash balance, meaning it has been recognized as income and accounted for in the financial statements.
- Therefore, it does not need to be shown separately in the balance sheet as it has already influenced the cash position.
Classification of Rent
- The rent received may have been an adjustment, indicating that it was accounted for in a previous period or has already been recognized in the income statement.
- This prevents double counting in the financial statements.
Expenses Payable Treatment
- Expenses payable, or accrued expenses, are liabilities that represent obligations to pay for services or goods received but not yet paid by the end of the accounting period.
- If expenses payable are not included in the b/s, it may indicate that these liabilities were settled before the balance sheet date or that they were not material enough to warrant separate disclosure.
- It’s crucial to ensure that all liabilities are accurately reflected to give a true picture of the company's financial position.
Conclusion
- Both the treatment of rent received and expenses payable are critical for accurate financial reporting.
- Understanding their classification helps maintain clarity in the financial statements and ensures that the balance sheet reflects the true financial health of the entity.
When analyzing Illustration 7 of Chapter 7 in accounts (7.41), it's essential to clarify why the rent received and expenses payable were treated the way they were in the balance sheet (b/s).
Rent Received Treatment
- The rent received is generally recorded in the cash balance as it contributes to the cash flow.
- As of 31st March, this rent is likely already included in the cash balance, meaning it has been recognized as income and accounted for in the financial statements.
- Therefore, it does not need to be shown separately in the balance sheet as it has already influenced the cash position.
Classification of Rent
- The rent received may have been an adjustment, indicating that it was accounted for in a previous period or has already been recognized in the income statement.
- This prevents double counting in the financial statements.
Expenses Payable Treatment
- Expenses payable, or accrued expenses, are liabilities that represent obligations to pay for services or goods received but not yet paid by the end of the accounting period.
- If expenses payable are not included in the b/s, it may indicate that these liabilities were settled before the balance sheet date or that they were not material enough to warrant separate disclosure.
- It’s crucial to ensure that all liabilities are accurately reflected to give a true picture of the company's financial position.
Conclusion
- Both the treatment of rent received and expenses payable are critical for accurate financial reporting.
- Understanding their classification helps maintain clarity in the financial statements and ensures that the balance sheet reflects the true financial health of the entity.
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Can anyone help me with these doubts In Illustration 7 of chapter 7 of accounts (7.41)Why the rent received wasn't taken into b/s? Is it already included in the balance of cash as on 31st march? Was it actually an adjustment?Also why expenses payable wasn't included in the b/s?
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Can anyone help me with these doubts In Illustration 7 of chapter 7 of accounts (7.41)Why the rent received wasn't taken into b/s? Is it already included in the balance of cash as on 31st march? Was it actually an adjustment?Also why expenses payable wasn't included in the b/s? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Can anyone help me with these doubts In Illustration 7 of chapter 7 of accounts (7.41)Why the rent received wasn't taken into b/s? Is it already included in the balance of cash as on 31st march? Was it actually an adjustment?Also why expenses payable wasn't included in the b/s? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Can anyone help me with these doubts In Illustration 7 of chapter 7 of accounts (7.41)Why the rent received wasn't taken into b/s? Is it already included in the balance of cash as on 31st march? Was it actually an adjustment?Also why expenses payable wasn't included in the b/s?.
Can anyone help me with these doubts In Illustration 7 of chapter 7 of accounts (7.41)Why the rent received wasn't taken into b/s? Is it already included in the balance of cash as on 31st march? Was it actually an adjustment?Also why expenses payable wasn't included in the b/s? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Can anyone help me with these doubts In Illustration 7 of chapter 7 of accounts (7.41)Why the rent received wasn't taken into b/s? Is it already included in the balance of cash as on 31st march? Was it actually an adjustment?Also why expenses payable wasn't included in the b/s? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Can anyone help me with these doubts In Illustration 7 of chapter 7 of accounts (7.41)Why the rent received wasn't taken into b/s? Is it already included in the balance of cash as on 31st march? Was it actually an adjustment?Also why expenses payable wasn't included in the b/s?.
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