If the prepaid expenses are not adjusted, assets on the balance sheet:
A)will be understated.
B)will be overstated.
C)may be either overstated or understated.
D)will not be affected.

Question

Quizplus · Accepted Answer

If prepaid expenses are not adjusted, they remain higher than they should be on the balance sheet, leading to an overstatement of assets. Prepaid expenses should decrease over time as they are recognized as expenses, reducing the assets accordingly.

If the Prepaid Expenses Are Not Adjusted, Assets on the Balance