Regions Inc.pays its rent of $60,000 annually on January 1 and makes monthly adjusting entries.If the February 28 monthly adjusting entry for prepaid rent is omitted, which of the following are true?
A)Failure to make the adjustment does not affect the February financial statements.
B)Expenses will be overstated by $5,000 and net income and stockholders' equity will be understated by $5,000.
C)Assets will be overstated by $10,000 and net income and stockholders' equity will be understated by $10,000.
D)Assets will be overstated by $5,000 and net income and stockholders' equity will be overstated by $5,000.

Question

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The Answer of Regions Inc.pays its rent of $60,000 annually on January 1 and makes monthly adjusting entries.If the February 28 monthly adjusting entry for prepaid rent is omitted, which of the following are true?
A)Failure to make the adjustment does not affect the February financial statements.
B)Expenses will be overstated by $5,000 and net income and stockholders' equity will be understated by $5,000.
C)Assets will be overstated by $10,000 and net income and stockholders' equity will be understated by $10,000.
D)Assets will be overstated by $5,000 and net income and stockholders' equity will be overstated by $5,000.