On July 1, 2021, Rents-A-Lot Inc. paid $72,000 for 36 months of advance rent on its warehouse. What would be the amount of rent expense in the 2022 financial statements for Rents-A-Lot under both cash-basis and accrual-basis accounting?

A) Cash-basis = $24,000; Accrual-basis = $24,000.

B) Cash-basis = $72,000; Accrual-basis = $12,000.

C) Cash-basis = $0; Accrual-basis = $24,000.

D) Cash-basis = $0; Accrual-basis = $12,000.

Answer: C

Which of the following statements are correct?

For accrual-basis accounting:

(1) record revenues when providing goods and services to customers.

(2) record expenses when cash is paid.

For cash-basis accounting:

(3) record revenue when cash is received.

(4) record expenses when benefit is received.

A) (1) and (4).

B) (2) and (3).

C) (1) and (3).

D) (2) and (4).

Answer: C