Question

Which of the following is TRUE regarding the accounts prepaid rent and rent​ expense?

A.Prepaid rent represents the cost of rent not yet paid​ for, while rent expense represents the cost of rent which has been paid for.

B.TThese account titles both mean the same thing and are used interchangeably.

C.Prepaid rent represents the cost of rent paid for but not yet​ used, while rent expense represents the cost of rent used to deliver goods or services to customers.

D.Rent expense represents an asset​ account, while prepaid rent represents the cost of rent used to deliver goods or services to customers.

Revenues have a normal​ [debit/credit] balance and​ [increase/decrease] Retained Earnings.

A.credit, decrease

B.credit, increase

C.debit, increase

D.debit, decreas

Caesar​ & Co. paid​ $1,000 cash for a two−year insurance policy. The journal entry would require​ a:

A.debit to Prepaid Insurance and a credit to Cash.

B.debit to Insurance Expense and a credit to Accounts Payable.

C.debit to Insurance Expense and credit to Cash.

D.debit to Insurance Expense and a credit to Retained Earnings.

Answer 1

1) Which of the following is TRUE regarding the accounts prepaid rent and rent​ expense?

Prepaid rent is an assets account and under prepaid rent says prepayment of rent and rent expense is that actual rent expense for that period

So answer is c) Prepaid rent represents the cost of rent paid for but not yet​used, while rent expense represents the cost of rent used to deliver goods or services to customers.

2) All revenue, gains, liabilities and equity has credit balance but expense, losses and assets has debit balance

So answer is B.credit, increase

3) Journal entry

So answer is a) debit to Prepaid Insurance and a credit to Cash.