Questions: Matisse Company pays 12,000 for rent of office space that will cover the next six months. Which of the following describes how Matisse will account for the payment for rent? Debit Cash for 12,000. Debit Prepaid Rent for 12,000. Debit Rent Expense for 12,000. Debit Rent Receivable for 12,000.

The answer is: Debit Prepaid Rent for \$12,000.

Explanation for each option:

1. Debit Cash for \$12,000: This option is incorrect. When Matisse Company pays cash for rent, the cash account should be credited, not debited, because cash is being reduced.

2. Debit Prepaid Rent for \$12,000: This option is correct. Prepaid Rent is an asset account that represents rent paid in advance. By debiting Prepaid Rent, Matisse Company is recognizing that it has an asset in the form of prepaid rent, which will be expensed over the next six months as the rent period progresses.

3. Debit Rent Expense for \$12,000: This option is incorrect. Rent Expense should be debited as the rent is used up over time, not when the payment is made in advance. Since the payment covers six months, the expense should be recognized monthly, not all at once.

4. Debit Rent Receivable for \$12,000: This option is incorrect. Rent Receivable would be used if Matisse Company were expecting to receive rent payments from a tenant, not when it is paying rent itself. Therefore, this account is not applicable in this scenario.