What is the difference between Rent Receivable and

Rent Payable?
Definition of Rent Receivable
Rent Receivable is an asset account in the general ledger of a landlord which reports the
amount of rent that has been earned but not received as of the date of the balance sheet.

Definition of Rent Payable

Rent Payable is a liability account in the general ledger of the tenant which reports the amount
of rent owed as the date of the balance sheet.

Example of Rent Receivable and Rent Payable

For simplicity, assume that the landlord owns just one property and the tenant pays rent only
to this landlord. Both parties use the accrual method of accounting and issue monthly financial
statements. The rent is $2,000 per month and it is due on the first day of each month.

If the rent is paid when due, the landlord's and tenant's balance sheets as of the last day of
every month will report zero balances in Rent Receivable and Rent Payable. However, if the
tenant has not paid the June rent as of June 30, the landlord will report Rent Receivable of
$2,000 and the tenant will report Rent Payable of $2,000.

What is an intangible asset?

Definition of Intangible Asset
An intangible asset is an asset that you cannot touch, since it lacks physical substance.
Accountants record intangible assets at their cost when they are acquired. Some intangible
assets have a limited life and are amortized to expense over that life.

Other intangible assets have an unlimited life and are not amortized. However, their reported
cost is reviewed annually. If there is an impairment loss, the amount on the balance sheet is
reduced and the loss is reported on the income statement.
Intangible assets can be some of the company's most valuable assets. However, if they were
developed by the company (as opposed to purchased from another company), there may be no
amount to report on the balance sheet.

Examples of Intangible Assets

Intangible assets include the following and more:

 Copyrights
 Patents
 Mailing lists
 Franchises
 Trademarks, brand names, logos, etc.
 Domain names
 Goodwill
Often the market value of a company's intangible assets is far greater than the market value of
the company's tangible assets such as its buildings and equipment. (Think logos, trademarks,
and brand names of Coca-Cola, Nike, Apple, etc.)

How can working capital be improved?

Definition of Working Capital
Working capital is defined as the amount by which a company's current assets exceed its
current liabilities.

How Working Capital Can be Improved

Some of the ways that working capital can be increased include:

 Earning additional profits

 Issuing common stock or preferred stock for cash
 Borrowing money on a long-term basis
 Replacing short-term debt with long-term debt
 Selling long-term assets for cash
In addition to increasing working capital, a company can improve its working capital by making
certain that its current assets are converted to cash in a timely manner. For example, if a
company can better manage its inventory and its accounts receivable, the company's cash and
liquidity will increase. This in turn improves the company's working capital. Similarly, if the
company can negotiate more favorable credit terms with its suppliers, the company will have
the benefit of having a larger cash balance (even though the amount of working capital will not
change).