On October 1,2016,Smith Service Company paid $5,000 in rent for the next five months,beginning with October 2016.On that date,Smith debited Prepaid Rent and credited Cash.If Smith fails to make an adjusting entry on December 31,2016,indicate the effect on assets,liabilities,equity,and net income.
$$\begin{array} { | l | l | }
\hline & \text { Understated, Overstated, No Effect } \
\hline \text { Assets } & \
\hline \text { Liabilities } & \
\hline \text { Equity } & \
\hline \text { Net Income } & \
\hline
\end{array}$$

Question

On October 1,2016,Smith Service Company paid $5,000 in rent for the next five months,beginning with October 2016.On that date,Smith debited Prepaid Rent and credited Cash.If Smith fails to make an adjusting entry on December 31,2016,indicate the effect on assets,liabilities,equity,and net income.
 $$\begin{array} { | l | l | } 
\hline & \text { Understated, Overstated, No Effect } \
\hline \text { Assets } & \
\hline \text { Liabilities } & \
\hline \text { Equity } & \
\hline \text { Net Income } & \
\hline
\end{array}$$

Quizplus · Accepted Answer

The Answer of On October 1,2016,Smith Service Company paid $5,000 in rent for the next five months,beginning with October 2016.On that date,Smith debited Prepaid Rent and credited Cash.If Smith fails to make an adjusting entry on December 31,2016,indicate the effect on assets,liabilities,equity,and net income.
 $$\begin{array} { | l | l | } 
\hline & \text { Understated, Overstated, No Effect } \
\hline \text { Assets } & \
\hline \text { Liabilities } & \
\hline \text { Equity } & \
\hline \text { Net Income } & \
\hline
\end{array}$$

On October 1,2016,Smith Service Company Paid $5,000 in Rent for the Next