On December 1, 2011, Blake Inc

question 38

Multiple Choice

On December 1, 2011, Blake Inc. signed an operating lease for a warehouse for ten years at $24,000 per year. Upon execution of the lease, Blake paid $48,000 covering rent for the first two years. How much should be shown in Blake's income statement for the year ended December 31, 2011, as rent expense?

• A) $0
• B) $2,000
• C) $24,000
• D) $48,000

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Definitions:

Accounting Equation

The foundational equation in accounting, representing the relationship between assets, liabilities, and equity (Assets = Liabilities + Equity).

Supplies

Consumable items or materials used in the daily operations of a business or for the completion of a task.

Withdrawal

The act of removing funds from an account or the act of taking out resources or assets from business use by the owners.

Business Transaction

An economic event that affects the financial position of a company and is recorded in its accounting system.