Over/Under: Alpha paid $12,000 cash in advance for rent and recorded it as a debit to Rent
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Over/Under: Alpha paid $12,000 cash in advance for rent and recorded it as a debit to Rent Expense and a credit to Cash. Only 25% of the rent was used during the year. Alpha recorded the following "normal" AJE: Debit Rent Expense for $3,000 and credit Prepaid Rent for $3,000. What is the effect on assets, liabilities, and net income?
- Assets : Understated
- Liabilities : No effect
- Net Income : Understated
why are the answers the following?
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