Bates Company paid $1,600 cash for the right to use office space during the coming year. Which of the following shows how this event would affect Bates' balance sheet?

Question

Quizplus · Accepted Answer

Option B shows an increase in assets (prepaid rent) and a decrease in cash, which accurately reflects the transaction of paying $1,600 cash for the right to use office space. Option A and C do not reflect the transaction at all, and Option D shows an increase in expenses, which is not accurate for this transaction.

Bates Company Paid $1,600 Cash for the Right to Use