BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
On July 1 the Fisher Shoe Store paid ₱24, 000 to Acme Realty for 6 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by the Fisher Shoe Store is:
|
|
debit Rent Expense, ₱24, 000; credit Prepaid Rent, ₱4, 000.
|
|
|
debit Prepaid Rent, ₱4, 000; credit Rent Expense, ₱4, 000.
|
|
|
debit Rent Expense, ₱4, 000; credit Prepaid Rent, ₱4, 000.
|
|
|
debit Rent Expense, ₱24, 000; credit Prepaid Rent, ₱20, 000.
|
Explanation:
Detailed explanation-1: -Correct Answer: Option c) interest expense. We can accrue interest expense when it has been incurred but not paid.
Detailed explanation-2: -Prepaid rent is an asset because the prepaid amount can be used in the future to reduce rent expense when incurred.
There is 1 question to complete.