Question

A company pays ₹ 5,000 in advance rent. What type of account is impacted, and how?

Options

• Prepaid Rent Account (Real, Dr).

• Prepaid Rent Account (Nominal, Cr).

• Prepaid Rent Account (Real, Cr).

• Prepaid Rent Account (Personal, Dr).

Answer 1

Prepaid Rent Account (Real, Dr)

Explanation:

Prepaid rent is an asset because it represents a benefit the company will receive in the future. Assets fall under real accounts, and the rule is “Debit what comes in.”

Hence, the Prepaid Rent A/c is debited.