Paying for one year of rent in advance does not affect the accounting equation.

Name: Paying for one year of rent in advance does not affect the accounting equation.
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Question

Quizplus · Accepted Answer

Paying for one year of rent in advance is considered a prepayment, which is recorded as an asset on the balance sheet. It does not affect the accounting equation, as one asset (prepaid rent) increases while another asset (cash) decreases. The equation remains in balance.

Paying for One Year of Rent in Advance Does Not