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 the owner has not yet earned the revenue and has an obligation to provide the service (office space) in the future. Therefore, it should be reported as a credit to a liability account. The corresponding debit would be to Cash to reflect the receipt of the rent payment.

The Owner of an Office Building Should Report Rent Collected