Pena Corporation recorded a business event using T-accounts as follows: Which of the following reflects how this event affects the company's financial statements?
A)Option A
B)Option B
C)Option C
D)Option D

Question

Pena Corporation recorded a business event using T-accounts as follows:  Which of the following reflects how this event affects the company's financial statements? 
A)Option A 
B)Option B 
C)Option C 
D)Option D

Quizplus · Accepted Answer

A debit to rent expense increases expenses, decreases net income, and decreases equity. A credit to prepaid rent decreases assets. The event does not affect cash flows.

Pena Corporation Recorded a Business Event Using T-Accounts as Follows