The Metropolitan Bakery Paid $12,000 in Advance for Six Months

question 82

Multiple Choice

The Metropolitan Bakery paid $12,000 in advance for six months of rent.Which of the following records this transaction?

• A) dr Cash and cr Unearned Rent for $12,000
• B) dr Prepaid Rent and cr Cash for $12,000
• C) dr Cash and cr Prepaid Rent for $12,000
• D) dr Rent Expense and cr Cash for $12,000

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Definitions:

Net Income

The amount of money that remains from revenues after all expenses, taxes, and costs have been subtracted.

Devotes Full Time

A commitment by an individual or employee to allocate all of their working hours to a specific job or task.

Tangible Assets

Physical and material assets that possess intrinsic value, such as machinery, buildings, and land.

Capital Accounts

Accounts on a company's balance sheet that represent the cumulative amount of money or other resources contributed by owners plus retained earnings.