If XYZ Corp.fails to adjust the Prepaid Rent account for rent that has expired, what effect will this have on that month's financial statements?
A) This will have no effect on the financial statements.
B) Expenses will be overstated and net income and shareholders' equity will be understated.
C) Assets will be overstated and net income and shareholders' equity will be understated.
D) Assets will be overstated and net income and shareholders' equity will be overstated.
Correct Answer:
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A)expense account.
B)shareholders' equity account.
C)liability
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A)liability accounts.
B)revenue accounts.
C)prepaid
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