At the start of this year 18 months rent was paid. At the year's end, how will this affect the balance sheet?
A) Assets will be decreased.
B) Liabilities will be increased.
C) Owner's equity will be increased.
D) This has no effect on the period end balance sheet.

Question

Quizplus · Accepted Answer

Paying 18 months' rent in advance will decrease assets (specifically cash or cash equivalents) on the balance sheet, as the payment reduces the company's available resources.

At the Start of This Year 18 Months Rent Was