Failure to record the expired amount of prepaid rent expense would not
A) understate expense.
B) overstate net income.
C) overstate owners' equity.
D) understate liabilities.

Question

Quizplus · Accepted Answer

Failure to record the expired amount of prepaid rent expense would understate liabilities because a portion of the rent has been paid in advance but not recorded as an expense, meaning that there is still a liability to the landlord for the rent that has been pre-paid.

Failure to Record the Expired Amount of Prepaid Rent Expense