Interest and Income Receivable

These are those things that are not expenses but they are income received into the business and so these should be added to the business gross profit before those expenses should be deducted in order to get the Net profit. Here, these income include thus: interest receivable, rent receivable, discount receivable etc. Any amount that is an outstanding one is called expenses payable but these are not yet paid and so must be added, to its relevant item in order to determine the total amount due i.e those amounts that are supposed to have been paid but not yet paid for in the year. Examples are rent paid in arrears. On this note, therefore, any amount that is paid in advance for any item must therefore be deducted in order to determine the exact amount due in the year example are rents paid in advance.

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