The owner of an office building should report rent collected in advance as a debit to Cash and a credit to:

Question

Quizplus · Accepted Answer

Rent collected in advance is considered a liability because it represents an obligation to provide goods or services in the future (i.e. to rent out the office space). Therefore, the proper accounting treatment is to credit a liability account (e.g. Unearned Rent Revenue) rather than an asset or revenue account. The debit to cash reflects the increase in the amount of money the owner has received from the tenant.

The Owner of an Office Building Should Report Rent Collected