A Company Using the Accrual Basis of Accounting Pays for One

question 76

Multiple Choice

A company using the accrual basis of accounting pays for one year of rent in advance.The entry to record this payment will involve a debit to:

• A) Rent Revenue
• B) Rent Expense
• C) Prepaid Rent
• D) Deferred Rent Revenue

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Definitions:

Standard Deduction

A preset tax deduction amount that reduces taxable income, not requiring itemization.

Joint Return

A combined tax return filed by married couples who choose to report their incomes, deductions, and credits on the same return.

Taxable Income

The amount of an individual's or company's income used to determine how much tax is owed, calculated as gross income minus deductions and exemptions.

Standard Deduction

A predefined tax deduction that reduces the income subject to tax, available to all taxpayers who do not itemize deductions.