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Entry booking and its effect on rent paid

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Querist : Anonymous

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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
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CA Siddhartha Bhardwaj

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CA Siddhartha Bhardwaj (Expert)
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.
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