Specimen exam: Rental income

They received cash of 481,200. This will include 21,200 that was owing from last year - so is income of last year - that needs subtracting. In addition they are owed 18,400 at the end of this year - this is income of this year and so needs adding. It does not include 28,700 that was received last year, but is this year income - so that needs adding. Finally, it does include 31,200 which was received this year but is next years income - so that needs subtracting. So the income for this year is 481,200 - 21,200 + 18,400 + 28,700 - 31,200 = 475,900. (Don't use t-accounts - it takes longer, and you will never be required to write up a t-account in the exam :-) )