Question

If the rent of one month is still to be paid, the adjustment entry will be_________________________.

• A. debit outstanding rent account and credit rent account
• B. debit profit and loss account and credit rent account
• C. debit rent account and credit profit and loss account
• D. debit rent account and credit outstanding rent account

Answer 1

The correct option is D debit rent account and credit outstanding rent account

There are various adjustment entries need to be passed at the end of financial year as there are certain expenses which are either paid in advance or not paid.

Outstanding expenses are those expenses which are due but not paid but services are already provided for. This is actually a liability of the business against the services taken.

In such cases, respective expenses account to be debited and outstanding expenses liability account to be credited.

Accounting entry will be as under:

Rent A/c Dr.

To Outstanding Rent A/c.