If rent is paid for any activity which is directly related with the primary business activity then rent is not other expense, but if rent is paid for activity which is not directly related to primary business activity then it is other expense.
rent is an expense while outstanding rent is a liability
Rent expense has a debit balance as a normal balance so increase in rent will be shown by debit to rent expense.
Prepaid rent is an asset and represents and advance payment for a future benefit Rent expense is an expense and is the expended portion of the rent consumed.
A fixed expense is an expense that doesn't change, regardless of the activity level. For most companies, rent expense is fixed. No matter what the company's sales volume, rent expense stays the same.
As all expenses has debit balance as normal balance and rent is also expense then rent expense also has debit balance and shown in income statement as a reduction from revenue.
rent is an expense while outstanding rent is a liability
Rent expense has a debit balance as a normal balance so increase in rent will be shown by debit to rent expense.
Prepaid rent is an asset and represents and advance payment for a future benefit Rent expense is an expense and is the expended portion of the rent consumed.
Debit Rent Expense xxxx Credit Rent payable / cash /bank xxxx
A fixed expense is an expense that doesn't change, regardless of the activity level. For most companies, rent expense is fixed. No matter what the company's sales volume, rent expense stays the same.
As all expenses has debit balance as normal balance and rent is also expense then rent expense also has debit balance and shown in income statement as a reduction from revenue.
As all expenses has debit balance as normal balance and rent is also expense then rent expense also has debit balance and shown in income statement as a reduction from revenue.
Yes normally rent is fixed expense and need to be paid even there is no production at all.
First let me say there is no account referred to as "Rent Payable". Rent is an operating expense for a business, you have two main accounts that deal with rent. 1 is Prepaid Rent, the other is Rent Expense. Prepaid Rent is used if the company pays their rent in advance. Prepaid Rent is an Asset. For example a company pays 6 months rent in advance, the journal entry isPrepaid Rent (debit) $$$Cash (credit) $$$Each month as the rent is "used up" an adjusting entry must be made. Since the cash has already been paid the entries move the amount needed of that month from one account to another. In this case we want to move it from the asset account Prepaid Rent to the Expense account Rent Expense the entry is;Rent Expense (debit) $$$Prepaid Rent (credit) $$$As you notice since prepaid rent is an asset account it has a debit balance, therefore to "remove" the amount of rent used we must credit that amount.If the company pays their rent monthly on a cash basis the journal entry is simple and straight forward.Rent Expense (debit) $$$Cash (credit) $$$You will not see an account called "Rent Payable" as a payable account is a liability account and expense are not classified as a liability but an operating expense.
How to correct misclassification of rent expense? It was recorded as rent expense, should have been recorded as prepaid rent with an effective tax rate of 30%.
Dr Rent Expense Cr Accrued Rent Expense (L) (Rent Due) then Dr Accrued Rent Expense (L) Cr Bank (When it is paid)
rent expense