When a business pays rent of $100, in which specialized journal is this event recorded?
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Answer: B. Cash payments journal
Explanation
Paying rent involves an outflow of cash, which must be recorded in the cash payments journal. This specialized journal captures all cash disbursements made by the business for expenses or liabilities. Rent is a standard operating cash outflow. Specialized journals streamline bookkeeping by segregating high-volume transaction types. The cash payments journal records every check written or cash disbursement made. At month-end, totals are posted to the general ledger.
Using specialized journals improves record-keeping efficiency and internal control over cash disbursements. It allows accounts payable and cash clerks to work concurrently without ledger bottlenecks. This structure is standard in manual and computerized accounting systems. The cash receipts journal tracks incoming cash, not rent payments. Sales and purchase journals record credit transactions rather than cash settlements. Therefore, the cash payments journal is the only appropriate log for rent outflows.
- Subject
- Accounting and Finance
- Category
- Accounting
- Topic
- —
- Difficulty
- medium
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