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CMA Foundation · Fundamentals of Financial and Cost Accounting · Accounting Cycle

Anita Enterprises paid Rs 15,000 rent by cheque, of which Rs 3,000 relates to the next year. While posting the rent payment from the journal to the ledger, which statement correctly describes the ledger posting for the Rs 15,000 payment itself (before any adjustment)?

The payment is posted by debiting the Rent Account and crediting the Bank Account with Rs 15,000. Rent is an expense that increases by debit, while bank falls by credit. The prepaid Rs 3,000 is dealt with later through an adjusting entry.

  1. ADebit Rent Account and credit Bank AccountCorrect
  2. BDebit Bank Account and credit Rent Account
  3. CDebit Rent Account and credit Outstanding Rent Account
  4. DDebit Prepaid Rent Account and credit Rent Account

Explanation

Rent is an expense, so it is debited when incurred, and the bank balance falls, so Bank is credited. The prepaid portion of Rs 3,000 is handled later through an adjustment entry, not in the original posting. Option B reverses the rules.

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