Question

Ram paid rent 5000 in the year. But actual rent was 4000 pm. Here Rs 1000
Outstanding expenses
O Prepaid expense
O Denoted Expenses
Paid as tip expenses

Answer 1

A1 I hope it will help

Answer 2

Rs. 1000 are prepaid expenses.

• Such an expense arises from a firm or individual making advance payments for commodities that will be provided in the future.

• These are reported as investments at first, but over a time frame their value is expensed into the income statement.

• Thus, since the rent was of Rs.4000, and Rs.5000 has been paid, thus Rs. 1000 are the prepaid expenses.