Question

Rent received from sub letting flat above office Rs. 6000
​

Answer 1

Answer:

That is, annual rent received will be 6000×12 = 72,000

Answer 2

From the four options a) revenue expenditure (or) b) capital expenditure (or) c) revenue income (or) d) capital receipt​ the correct option is c) Revenue Income.

Why is rent received known as revenue income?

• Rent received is an income to the owner as it is the type of revenue that is treated as a property income.
• When the owner receives the rent he is represented to receive an income of Rs. 6,000.
• A rent is received by an owner only when he lets his property in lease.
• The Journal Entry is,

        Cash account                    Dr      6,000

           To Rent account                                 6,000