A company prepays rent of $500 and receives a $3,000 payment for services not yet rendered. Under accrual basis accounting, these two transactions will

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Prepaid rent is recorded as an asset and the $500 payment does not affect profit until the rent is actually used. The $3,000 payment for services not yet rendered is recorded as a liability and does not affect profit until the services are actually performed. Therefore, these two transactions do not have an immediate effect on profit.

A Company Prepays Rent of $500 and Receives a $3,000