Question

Rent collected in advance is: Multiple Choice A shareholders' equity account in the balance sheet. A temporary account, not in the balance sheet at all. An asset account in the balance sheet. A liability account in the balance sheet.

Answer 1

Answer:

A liability account in the balance sheet.

Explanation:

When rent is collected in advance, the entries required to be recognized at the point of collection is as follows;

Debit Cash account

Credit Unearned/Deferred rental revenue

The cash account is an asset while the Unearned/Deferred rental revenue is a liability account.

As such, the collection of rent in advance is A liability account in the balance sheet.