Rent Paid In Advance Entry In Accounting Equation
As Rent Paid In Advance / Prepaid Rent is an example of Prepaid Expenses which are Current Assets so, it affects asset side of Accounting Equation . Moreover, it also depends upon accounting systems which are followed by a business. 1. On Accrual Basis of Accounting System (Assuming That Prepaid Rent Initially recorded as an Asset) Prepaid Rent a/c 5000 Cash a/c 5000 (Rent Paid In Advance for the Month) We know that Accounti ng Equation is Assets = Liabilities + Owner’s Equity Cash + Prepaid Rent = Liabilities + Owner’s Equity -5000 + 5000 = Liabilities + Owner’s Equity