A Company Using the Cash Basis of Accounting Pays for One

question 124

Multiple Choice

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

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

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Definitions:

Customer's Profitability

An analysis to determine the profit margin or net profit a company makes from serving a particular customer.

Sales Contacts

Interactions or engagements between a company's sales team and potential or existing customers with the aim of promoting and selling products or services.

Accounts Receivable

Money owed to a business by its customers for goods or services delivered but not yet paid for.

Purchase Order

A formal document sent from a buyer to a supplier with a request to purchase specified products or services at agreed upon terms.