If there is a balance in the prepaid rent account after adjusting entries are made, it represents a (n)
A) deferral
B) accrual
C) revenue
D) liability

Question

Quizplus · Accepted Answer

Prepaid rent is a type of deferred expense, which means that the payment for rent has been made in advance but the benefits of the rent have not yet been received. Adjusting entries are made to recognize the portion of the prepaid rent that has been used up during the accounting period. If there is a balance in the prepaid rent account after adjusting entries are made, it represents the portion of the rent payment that has not yet been used up and is still a deferral.

If There Is a Balance in the Prepaid Rent Account