The adjusting entry to adjust the prepaid rent account for rent expired during the period results in an increase in expenses and a decrease in stockholders' equity.

Question

Quizplus · Accepted Answer

The adjusting entry to recognize an expense previously recorded as prepaid results in assets decreasing, expenses increasing, and as a result of expenses increasing, stockholders' equity also decreases.

The Adjusting Entry to Adjust the Prepaid Rent Account for Rent