If a Company Fails to Adjust a Prepaid Rent Account

question 177

Multiple Choice

If a company fails to adjust a Prepaid Rent account for rent that has expired what effect will this have on that month's financial statements?

• A)Failure to make an adjustment does not affect the financial statements.
• B)Expenses will be overstated and net income and stockholders' equity will be under- staed.
• C)Assets will be overstated and net income and stockholders' equity will be understated.
• D)Assets will be overstated and net income and stockholders' equity will be overstated.

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Definitions:

Cell Bodies

The part of a neuron that contains the nucleus and most of the cytoplasm, serving as the neuron's metabolic center.

Motor Division

The component of the nervous system that includes all the nerves controlling the muscular system and external movements.

Peripheral Nervous System

The part of the nervous system outside the brain and spinal cord, responsible for connecting the central nervous system to limbs and organs.

Central Nervous System

The part of the nervous system consisting of the brain and spinal cord, responsible for processing information and controlling responses.