When any amount is received by the business firm in exchange of use of the assets of the business firm by other person then it will be called as rent received. The rent is received by the business firm in respect of land and building or machinery or furniture etc. Rent is paid by the third party as per the rent deed made by both parties. It may be received on monthly basis or quarterly basis or half yearly basis or yearly basis. Normally the rent is being received in advance only.

Rent received is a direct income for a business firm whose business is just to give the assets on rental basis only. For others, it is an indirect income. Rent received is shown in income side of profit and loss account. Some time rent is not received before the finalization of final account for that particular financial year, in that case the rent receivable will be added to rent received account and rent receivable account will be shown in assets side of balance sheet.

Accounting Treatment of Rent Received

a) In case of rent received in cash or by cheque:-

Type of voucher to be prepared:- Cash or Bank Receipt Voucher

Entry to be made

Debit:- Cash Account

or

Bank Account

Credit:- Rent Received Account

b) In case of Rent due but not received:-

Type of voucher to be prepared:- Journal Voucher

Entry to be made

Debit:- Rent Receivable Account

or

Personal Account of Leesee

Credit:- Rent Received Account

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