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Daniel [21]
3 years ago
12

When the company pays rent expense for the current month, what is the effect on the accounting equation for that company?

Business
1 answer:
GREYUIT [131]3 years ago
3 0

Answer:

decrease the stockholder equity and decrease in assets

Explanation:

As we know, the accounting equation is  

Total assets = Total liabilities + stockholder equity

In the given case,  

The rent is paid for the current month, so the journal entry would be

Rent expense A/c Dr XXXXX

    To Cash A/c XXXXX

(Being rent is paid)

So it decreases the stockholder equity as it includes the income and expenses part and it decreases in assets as it reduces the cash balance

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