What Type of Account Is Prepaid Rent,and What Is Its

question 131

Multiple Choice

What type of account is Prepaid Rent,and what is its normal balance?

• A) It is an expense account and has a debit balance.
• B) It is a liability account and has a credit balance.
• C) It is a revenue account and has a credit balance.
• D) It is an asset account and has a debit balance.

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Definitions:

Retained Earnings

The portion of a company's profits that is not distributed as dividends to shareholders but is kept within the company for reinvestment.

Restriction/Appropriation

The limitation of retained earnings distribution specified by management or shareholders, often for specific purposes like future investments or debt repayment.

Stockholders' Equity

Refers to the residual interest in the assets of a corporation that remains after deducting its liabilities, representing ownership interest in the company.

Par Common Stock

Common stock issued with a nominal value per share, which represents the minimum legal capital that must be paid per share.