Entry booking and its effect on rent paid
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
04 January 2012
eg; i am paying rent of 100000 for the month of jan,12 on 2.1.2012 as an advance so i am booking entry as
Rent a/c dr
to rent payable
( Entry Booked)
Rent payable dr
to BAnk
to tds
( Payament Made0 both the entries were made on same date.
so my doubt was i have to book that expenses as prepaid or not if yes pls suggest me a entry and its effect on balance sheet
Rent a/c dr
to rent payable
( Entry Booked)
Rent payable dr
to BAnk
to tds
( Payament Made0 both the entries were made on same date.
so my doubt was i have to book that expenses as prepaid or not if yes pls suggest me a entry and its effect on balance sheet
04 January 2012
An expense is said to be a Prepaid expense when the amount paid covers a period BEYOND the current accounting period.
For instance if you pay rent for 6 months from Jan to June, then rent for 3 months (April, May, June) shall be prepaid.
If an expense is paid for more than one month falling in the current accounting period, it will not be treated as prepaid expense.
For instance if you pay rent for 6 months from Jan to June, then rent for 3 months (April, May, June) shall be prepaid.
If an expense is paid for more than one month falling in the current accounting period, it will not be treated as prepaid expense.
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