Question

Rent expense of a nonprofit organization paid in advance. Which of the following is the correct classification of rent paid in advance ?

• A. Expense
• B. Lability
• C. Equity
• D. Asset

Answer 1

The correct option is D Asset

Rent paid in advance means rent amount which is not yet due is already paid. It is an asset as non profit organisation will not be required to pay when it will actually due. It will give benefit to future. Anything that gives benefit in future is an asset for firm. So, it is an asset.