What will be effect on balance sheet accounts

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Question 1: On February 1, Long Company paid $10,800 for one year of advertising in advance. Long debited Prepaid Advertising. The advertising expense will be used evenly throughout the year. If the appropriate adjusting entry is not made at the end of the year, what will be the effect on:

(a) Income statement accounts (overstated, understated, or no effect)?

(b) Net income (overstated, understated, or no effect)?

(c) Balance sheet accounts (overstated, understated, or no effect)?

Reference no: EM132473838

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