At Year-End,it Was Forgotten to Adjust the Asset Prepaid Rent

question 16

Multiple Choice

At year-end,it was forgotten to adjust the asset prepaid rent for the $5,000 rent expense used-up during the year.This will result in an:

• A) understatement of assets and an overstatement of profit and equity.
• B) overstatement of assets, profit, and equity.
• C) overstatement of liabilities and an understatement of profit and equity.
• D) understatement of assets, profit, and equity.

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Definitions:

FASB

The Financial Accounting Standards Board, an independent organization responsible for establishing and improving financial accounting and reporting standards in the United States.

Simultaneous Financing

The process of arranging for multiple sources of finance at the same time, often for complex deals or projects.

Investing Activities

Transactions involving the acquisition or disposal of long-term assets and other investments not considered cash equivalents.

Financing Activities

Transactions and events that influence the size and composition of the equity and borrowings of an entity, reflected within the cash flow statement.