The Lazarus Company recorded the following adjustment in general journal format:

Which of the following choices accurately reflects how this event would affect the company's financial statements?

A)Option A
B)Option B
C)Option C
D)Option D

Question

The Lazarus Company recorded the following adjustment in general journal format:

Which of the following choices accurately reflects how this event would affect the company's financial statements?

A)Option A 
B)Option B 
C)Option C 
D)Option D

Quizplus · Accepted Answer

The debit to Rent expense increases that expense account,which decreases net income and stockholders' equity (Retained earnings).The credit to Prepaid Rent decreases that asset account.As is the case with all adjusting entries,it does not affect cash flows.

The Lazarus Company Recorded the Following Adjustment in General Journal