Rent received from sub letting flat above office Rs. 6000
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That is, annual rent received will be 6000×12 = 72,000
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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
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