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On July 1,20X8, your calendar year company prepays $12,000 for 3 years' rent and records...

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Accounting

On July 1,20X8, your calendar year company prepays $12,000 for 3 years' rent and records the amount as an asset. At year end, you discover that the adjusting entry debits Rent Expense and credits Prepaid Rent for $1,000. Without a correcting entry:
assets will be overstated
net income will be understated
liabilities will be understated
none of the above
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