If the Total Amount for Rent Expense Is Inadvertently Posted

question 36

Multiple Choice

If the total amount for Rent Expense is inadvertently posted to Prepaid Rent at the end of the year, what will be the effect on the year-end financial statements?

• A) Assets will be understated
• B) Revenues will be overstated
• C) Revenues will be understated
• D) Revenues will be correctly stated

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Definitions:

Factory Utilities

The costs of utilities used in a factory, such as electricity, gas, and water, that are necessary for production processes.

Glue

A substance used to bind materials together by surface attachment, widely used in various manufacturing and crafting applications.

Direct Costs

Costs that can be directly tied to the production of specific goods or services, such as raw materials and direct labor.

Accounting Period

A span of time during which financial events are recorded and compiled into financial statements.