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Prepaid expenses entries

AS 1074 views 2 replies

Hi

Isn't prepaid rent like this

Dr. Prepaid rent

Cr. Bank

And as the months go by we recognise it as

Dr. Prepaid expense

Cr. Prepaid rent

Then why did it show as a wrong answer in multiple choice when I chose it?

 

Txs

Replies (2)
If you pay rent for next month in Current month entry will be

Prepaid rent A/c Dr
To Bank. A/c Cr
( Rent paid for next month)

prepaid rent A/c under Asset side Balance sheet.

In the next month adjustment entry will be

Rent A/c Dr
To prepaid rent A/c Cr
( Rent prepaid last month now adjusted )

Ok.im wondering why I didn't get qualified on an interview app.


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