Is monthly rent payment for office space a current liability?
submitted by Ronald

Kat

No, it is an expense.

It is recorded as a current liability when it is an accrued expense i.e. when the expense has been incurred but has not yet been paid at the end of the accounting period.

Accrued expenses is an adjustment accounts raised at year end for the purpose of facilitating the close-off procedure and determining the expenses incurred during the actual period under review.

Example: If your end is December and you pay your Jan rent in advance (i.e. during december) the portion paid for Jan will be closed off to prepaid expenses and will reflect as a current asset on your balance sheet as although the expense has been paid, it has not actually been incurred during the current financial period.