on july 25 Hamilton company accountatn prepared a check for august rent. the landlord received the check on the 31 of july and cashes iton the 2 of august. when should the rent transaction be recorded
The rent transaction should be recorded on the date of the check preparation, which is July 25.
When recording transactions, it is important to follow the principle of "accrual accounting." Accrual accounting states that transactions should be recorded when they occur, not when the money is paid or received. In this case, the transaction occurred when the check was prepared on July 25, even though the landlord received the check on July 31 and cashed it on August 2.
By recording the rent transaction on July 25, the financial records will accurately reflect the timing of the rent expense and will align with the accrual accounting principle.