When It Paid Its Rent in Advance,a Company Recorded Prepaid

question 241

Multiple Choice

When it paid its rent in advance,a company recorded Prepaid Rent.As of the end of the accounting year,the prepayment had expired.If no adjustment is made to record this expiration,which of the following will occur?

• A) Assets will be understated and expenses will be overstated.
• B) Assets will be overstated and expenses will be understated.
• C) Assets and expenses will be overstated.
• D) Assets and expenses will be understated.

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Definitions:

Attach

in legal terms, means to legally seize a person's property to secure or satisfy a court judgement.

Enforceable Security Interest

A legal claim or lien on collateral that gives a creditor the right to take possession of the property if the debtor defaults on obligations.

Continuation Statement

A legal document filed to extend the duration of a UCC financing statement, maintaining the priority of the secured interest in the collateral.

Financing Statement

A document filed to give public notice of a security interest in personal property, used to perfect a lender's interest in the property as collateral for a loan.