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In: Accounting

When rent is prepaid, which of the following occurs? Multiple Choice liabilities increase assets are unchanged...

When rent is prepaid, which of the following occurs?

Multiple Choice

  • liabilities increase

  • assets are unchanged

  • owner’s equity decreases

  • assets increase

Solutions

Expert Solution

When rent is prepaid, it has the following effects:

- Assets increase in the form of prepaid rent.

- Assets decrease in the form of cash.

Thus, net effect of prepaid rent is that total assets remain unchanged.

It does not effect liabilities or owner’s equity.

Second option is correct.

ekkarill92 answered 2 years ago
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