Accrual Accounting vs. Cash Basis Accounting Video Lessons

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Problem: On December 1, 2011, a landlord collected $5,000 cash from a tenant for December 2011's rent but the tenant's rent for December is $8,000. Which of the following is true with respect to the landlord'sĀ financial statements? A. $8,000 would be reported on the statement of cash flows. B. $8,000 would appear on the balance sheet as rent receivable. C. $8,000 would appear on the income statement as rent revenue earned. D. $5,000 would appear on the balance sheet as prepaid rent.

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Problem Details

On December 1, 2011, a landlord collected $5,000 cash from a tenant for December 2011's rent but the tenant's rent for December is $8,000. Which of the following is true with respect to the landlord's financial statements?

A. $8,000 would be reported on the statement of cash flows.

B. $8,000 would appear on the balance sheet as rent receivable.

C. $8,000 would appear on the income statement as rent revenue earned.

D. $5,000 would appear on the balance sheet as prepaid rent.

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