LIS paid 12,000 rent for the year ended 30 December 2020. However, the agreed annual rental charge for the year in his tenancy agreement contract is 10,000 for the whole year. How will this be treated in the income statement (IS) and statement of financial position (SOFP) for the period?

Select one:

a. For IS, expenses will have rent valued at 2,000. For SOFP, current assets will have prepayments valued at 10,000

b. For IS, expenses will have rent valued at 10,000. For SOFP, current assets will have prepayments valued at 2,000

c. For IS, expenses will have rent valued at 2,000. For SOFP, current liabilities will have accrual valued at 10,000

d. For IS, expenses will have rent valued at 10,000. For SOFP, current liabilities will have accruals valued at 2,000