Asked by albandari aljuaid on Jul 19, 2024
Verified
Which of the following does not correctly describe an adjusting journal entry that debits rent expense and credits prepaid rent?
A) The entry increases expenses and decreases stockholders' equity.
B) The entry decreases net income and decreases assets.
C) The entry increases expenses and decreases current assets.
D) The entry decreases net income and decreases liabilities.
Rent Expense
The cost incurred for using property or equipment under a lease agreement.
Prepaid Rent
Payments made in advance for rent, which is recorded as an asset initially and then expensed over the period the payment covers.
Adjusting Journal Entry
A journal entry made at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.
- Apprehend the purpose and approach of adjusting entries in the formulation of financial statements.
- Acquire an understanding of the way specific transactions alter financial statements.
Verified Answer
Learning Objectives
- Apprehend the purpose and approach of adjusting entries in the formulation of financial statements.
- Acquire an understanding of the way specific transactions alter financial statements.
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