Question

When rent is incurred in one period and paid in the next period, this leads to which of the following accounts appearing in the statement of financial position?

Select one:

a. Rent payable

b. Rent expense

c. Prepaid rent

d. Rent receivable

Answer 1

An expense is recorded at the time ,it is incurred .Following adjusting entry is prepared when rent is incurred but paid in next period (or not paid in current period)

Date	Account title	Debit	credit
	Rent expense	XXXX
	Rent payable		XXXX

Rent expense is an expense to be reported in income statement whereas rent payable is a liability to be paid in future period and is reported in balance sheet (statement of financial position).

Rent receivable (used when rent is yet to be received but earned ) or prepaid rent (rent expense not yet incurred but paid in advance) is an asset account thus they are incorrect options.

correct option is "A" -Rent payable