The business receives a rent invoice for £100 which two accounts are affected?

• A. Rent expenses will increase by £100 and Trade payables will increase by £100
• B. Rent expenses will decrease by £100 and Trade payables will increase by £100
• C. Rent expenses will increase by £100 and Cash will increase by £100
• D. Rent revenue will increase by £100 and Trade payables will increase by £100

Answer: (A)

When you receive a rent invoice, you record an expense and a liability at the same time. In double-entry bookkeeping, expenses increase on the debit side and liabilities increase on the credit side. So you would debit Rent expense by £100 to reflect the cost incurred, and credit Trade payables by £100 to show the amount you owe to the supplier. This captures the two-way effect: you’ve recognised the cost, and you’ve recognised a payable.

If you had paid the invoice immediately, Cash would be affected instead of Trade payables (cash would decrease). The option that treats the expense as increasing and the payable as increasing matches this invoicing scenario. The other options either treat the expense as decreasing, involve cash when it isn’t paid yet, or treat the transaction as revenue, which isn’t correct for paying rent.