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Bramble Inc. pays its rent of $65400 annually on January 1. If the February 28 monthly adjusting entry for prepaid rent is omitted, which of the following will be true? O Assets will be overstated by $10900 and net income and owner's equity will be understated by $10900. O Failure to make the adjustment does not affect the February financial statements. O Assets will be overstated by $5450 and net income and owner's equity will be overstated by $5450. O Expenses will be overstated by $5450 and net income and owner's equity will be understated by $5450.

Bramble Inc. pays its rent of $65400 annually on January 1. If the February 28 monthly adjusting entry for prepaid rent is omitted, which of the following will be true? O Assets will be overstated by $10900 and net income and owner's equity will be understated by $10900. O Failure to make the adjustment does not affect the February financial statements. O Assets will be overstated by $5450 and net income and owner's equity will be overstated by $5450. O Expenses will be overstated by $5450 and net income and owner's equity will be understated by $5450.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Bramble Inc. pays its rent of $65400 annually on January 1. If the February 28 monthly adjusting entry for prepaid rent is omitted, which of the following will be true? O Assets will be overstated by $10900 and net income and owner's equity will be understated by $10900. O Failure to make the adjustment does not affect the February financial statements. O Assets will be overstated by $5450 and net income and owner's equity will be overstated by $5450. O Expenses will be overstated by $5450 and net income and owner's equity will be understated by $5450.
Transcribed Image Text:Bramble Inc. pays its rent of $65400 annually on January 1. If the February 28 monthly adjusting entry for prepaid rent is omitted, which of the following will be true? O Assets will be overstated by $10900 and net income and owner's equity will be understated by $10900. O Failure to make the adjustment does not affect the February financial statements. O Assets will be overstated by $5450 and net income and owner's equity will be overstated by $5450. O Expenses will be overstated by $5450 and net income and owner's equity will be understated by $5450.
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