In October, Your Company Prepays Rent of $7,000 for November

question 8

Multiple Choice

In October, your company prepays rent of $7,000 for November and December. Which of the following describes the effects of this transaction in October?

• A) Assets decrease $7,000 and liabilities decrease $7,000.
• B) Assets increase $7,000 and stockholders' equity increases $7,000.
• C) There is no change to total assets, liabilities or stockholders' equity.
• D) Liabilities decrease $7,000 and stockholders' equity increases $7,000.

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Definitions:

Ciliary Body

A structure in the eye that includes the ciliary muscle, which controls the shape of the lens, and the ciliary epithelium, which produces the aqueous humor.

Lysozyme

An enzyme found in saliva, tears, and other secretions, capable of breaking down bacterial cell walls to fight infection.

Bony Labyrinth

A complex system of passages and cavities within the temporal bone of the skull, important for hearing and balance.

Endolymph

A fluid within the membranous labyrinth of the inner ear that plays an essential role in the transduction of sound vibrations to neural signals.