If a Company Pays Rent for the Next Period in Advance

question 76

Multiple Choice

If a company pays rent for the next period in advance, what is the effect of the transaction on the accounting equation?

• A)Assets decrease, and liabilities decrease.
• B)Assets decrease, and owners' equity decrease.
• C)Assets increase, and liabilities increase.
• D)There is no effect on the accounting equation.

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Definitions:

Saprotrophs

Organisms that feed on and decompose dead organic matter, recycling nutrients back into the environment.

Diatoms

A major group of algae, specifically microalgae, characterized by their unique cell walls composed of silica.

Unicellular Alga

A single-celled microorganism in the algae family, which conducts photosynthesis and lives in aquatic environments.

Whirls

Circular or spiraling patterns or movements.