in accounting equation if we paid rent outstanding RS 500 thn how it would be entered in it ?

asked Mar 1, 2014 in Accounting Equation by talhaaslam (6 points) 14,787 views

1 Answer

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answered Mar 1, 2014 by jbsclasses (3,971 points)
rent is expense when we  pay it why i does not be redued fro capital nd cash is only reduced from cash ?
You are right, when rent is paid, it gets reduced from cash and capital because rent is an expense, it reduces capital and it also reduces cash.  But when we pay rent which is already outstanding, then outstanding liability reduces instead of capital. Of course simultaneously cash also reduces from asset side.
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