Question: On July 1 , 2 0 X 8 , your calendar year company prepays $ 1 2 , 0 0 0 for 3 years' rent

On July 1,20X8, your calendar year company prepays $12,000 for 3 years' rent and records the amount as an asset. At year end, you discover that the adjusting entry debits Rent Expense and credits Prepaid Rent for $1,000. Without a correcting entry:
assets will be overstated
net income will be understated
liabilities will be understated
none of the above
On July 1,20X8, your calendar year company prepays $12,000 for 3

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