The Bookkeeper Recorded Prepaying Rent in the Amount of $1,200 $$\begin{array} { | c | r | r | } \hline \text { Accounts receivable } & 900 & \\\hline \text { Prepaid rent expense } & & 900 \\\hline\end{array}$$

question 71

Multiple Choice

The bookkeeper recorded prepaying rent in the amount of $1,200 incorrectly as $2,100. Which of the following journal entries will correct the ledger accounts if the business records prepaying expenses by debiting an asset account?

• A) \[\begin{array} { | c | r | r | }
• \hline \text { Accounts receivable } & 900 & \\
• \hline \text { Prepaid rent expense } & & 900 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | c | r | r | }
• \hline \text { Cash } & 900 & \\
• \hline \text { Prepaid rent expense } & & 900 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | r | r | }
• \hline \text { Cash } & 900 & \\
• \hline \text { Rent expense } & & 900 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | c | r | r | }
• \hline \text { Rent expense } & 900 & \\
• \hline \text { Cash } & & 900 \\
• \hline
• \end{array}\]

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Definitions:

Depreciation

The method of distributing the expense of a physical asset throughout its life span.

Double-Declining-Balance

An accelerated method of depreciation where an asset loses value at double the rate of the straight-line depreciation method.

Residual Value

The estimated salvage value of an asset at the end of its useful life, used in calculating depreciation.

Depreciation

The process of allocating the cost of tangible assets over their useful lives, reflecting the decrease in their value over time.