Not recording the Prepaid Rent used causes
A. assets to be too high.
C. expenses to be too high.
D. revenue to be too high.
My answer is A
To determine the answer to this question, we need to understand the effect of not recording the prepaid rent used. Prepaid rent refers to an advance payment made for renting a property or space for a specified period.
When the prepaid rent is used, it needs to be recognized as an expense in the accounting records, to reflect the fact that the benefit of using the rented property has been obtained.
If the prepaid rent used is not recorded, it will result in expenses being understated. This means that expenses on the income statement will be lower than they should be, causing net income to be higher than it actually is.
Therefore, the correct answer to the question is C. Expenses will be too high if the prepaid rent used is not recorded.