What will be the treatment of rent outstanding in accounting equation?
Answers
Accounting equation
assets = liability + capital
treatment of rent outstanding
Increase in rent outstanding (liabilities)
Decrease in capital
As rent is expense its deducted from capital and
rent outstanding is added in liabilities
Answer:
Rent Outstanding is subtracted from the capital balance and added to liabilities ,Outstanding Rent will be the treatment of rent outstanding in accounting equation.
Explanation:
Rent is an expense for a business, and unpaid rent indicates that it is due and hence a liability that the business must resolve. The capital balance is reduced and liabilities are increased due to the Rent Outstanding. Rent is an expense for a business, and unpaid rent indicates that it is due and hence a liability that the business must resolve. Hence Liabilities are increased and Rent Outstanding is deducted from the capital balance.
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Due to the fact that it represents a person's outstanding expenses, unpaid rent is the representative personal account. Because of this, it is categorized as a personal account.