It is September and Moto Inc has not yet paid cash for its office building\'s re

Question

It is September and Moto Inc has not yet paid cash for its office building's rent for the month of April. It has a deal with the landlord that allows Motto to pay each month's rent six months later. Moto's fiscal year ends on June so April's rent expense falls under the fiscal year already ended. The financial statements for that year are complete. Moto must have recorded that rent as:

an accrued expense, an asset.

a prepaid expense, an asset.

an accrued expense, a liability.

not recorded anywhere yet.

an accrued expense, an asset.

a prepaid expense, an asset.

an accrued expense, a liability.

not recorded anywhere yet.

Explanation / Answer

Solution.

In this situation according to deal with the landlord. Rent of month of april is trreated as expense accured in current financial year but not paid yet.

So we can treat this tranjection as an an accrued expense, a liability.

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