Which of the following entries records the receipt of cash for two months' rent? The cash was received in advance of providing the service.
A) Prepaid Rent, debit; Rent Revenue, credit
B) Cash, debit; Unearned Rent, credit
C) Cash, debit; Prepaid Rent, credit
D) Cash, debit; Rent Expense credit

Question

Quizplus · Accepted Answer

When cash is received in advance for services to be provided in the future, it is recorded as a liability because the company owes the service. Therefore, the correct entry is to debit Cash (increasing assets) and credit Unearned Rent (increasing liabilities), reflecting the obligation to provide rent space in the future.

Which of the Following Entries Records the Receipt of Cash