In October, Your Company Prepays Rent of $7,000 for November

Multiple Choice

In October, your company prepays rent of $7,000 for November and December. Which of the following describes the effects of this transaction in October?

A) Assets decrease $7,000 and liabilities decrease $7,000.
B) Assets increase $7,000 and stockholders' equity increases $7,000.
C) There is no change to total assets, liabilities or stockholders' equity.
D) Liabilities decrease $7,000 and stockholders' equity increases $7,000.