Alex owns a business and pays her business telephone rental quarterly in advance. £25 is paid for on 01/ 11/X1, 01/02/X2, 01/05/X2, 01/08/X2 and 28/10/X2. What is the charge that should appear in the income statement account in respect of telephone rental for the year ended 31/10/X2?

Question

Quizplus · Accepted Answer

The charge for the year ended 31/10/X2 should include payments for 01/11/X1, 01/02/X2, 01/05/X2, and 01/08/X2, totaling £100. The payment on 28/10/X2 is for the next quarter, so it's a prepayment of £25.

Alex Owns a Business and Pays Her Business Telephone Rental