When a Landlord Records Rent Received in Advance from a Tenant

question 82

Essay

When a landlord records rent received in advance from a tenant in a revenue account, the adjusting entry required at year end to allocate the rent to the proper periods has an impact on financial statement elements. What effect (increase, decrease, no effect) does the required adjustment have on each of the following elements?
$\begin{array}{|l|l|}\hline \text { Assets } & \text { Revenues } \\\hline \text { Liabilities } & \text { Expenses } \\\hline \text { Shareholders' equity } & \\\hline\end{array}$

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Definitions:

Moderate Anxiety

A level of anxiety that is noticeable and may hinder some daily functions but is not debilitating.

Reaction Formation

A defense mechanism where unacceptable impulses are transformed into their opposite, often presented in exaggerated or compulsive behaviors.

Repression

A defense mechanism where distressing thoughts or feelings are unconsciously excluded from consciousness.

Denial

A psychological defense mechanism where an individual refuses to accept reality or facts, thus avoiding a potentially distressing truth.