NOT recording the Prepaid Rent Expense used causes:
A)assets to be too low.
B)liabilities to be too high.
C)expenses to be too low.
D)revenue to be too high.

Question

Quizplus · Accepted Answer

Not recording the Prepaid Rent Expense used would result in lower reported expenses, which would make profits appear higher than they actually are. This is because Prepaid Rent is initially recorded as an asset, but it is expensed over time as it is used up. If the expense is not recorded, the asset balance remains too high and the expense balance remains too low, which would lead to an inaccurate portrayal of the company's financial health.

NOT Recording the Prepaid Rent Expense Used Causes