Rent expense would be reported on which financial statement?

Rent expense would be reported on which financial statement?

• A. Balance Sheet
• B. Income Statement
• C. Cash Flow Statement
• D. Statement of Changes in Equity

Answer: (B)

Rent expense is an operating cost recognized in the period to show how much the company spent to use space during that time. In accrual accounting, expenses are recorded when incurred, not just when cash is paid, so this item reduces net income on the income statement. The balance sheet wouldn’t carry a line called rent expense; instead you might see related amounts like prepaid rent (an asset) or rent payable (a liability) there. The cash flow statement would reflect the actual cash paid for rent under operating activities, but the expense itself is reported on the income statement.

Rent expense is an operating cost recognized in the period to show how much the company spent to use space during that time. In accrual accounting, expenses are recorded when incurred, not just when cash is paid, so this item reduces net income on the income statement. The balance sheet wouldn’t carry a line called rent expense; instead you might see related amounts like prepaid rent (an asset) or rent payable (a liability) there. The cash flow statement would reflect the actual cash paid for rent under operating activities, but the expense itself is reported on the income statement.