A New Company Signed a Lease for Office Space During

Multiple Choice

A new company signed a lease for office space during their first month of business. At that time they paid a total of $12,000 for first and last months' rent. At the end of the first month, the effect on the financial statements would be

A) $12,000 rent expense.
B) $6,000 rent expense and $6,000 prepaid rent on the Statement of Financial Position.
C) $12,000 prepaid rent on the Statement of Financial Position.
D) Nothing recorded because the company has not made any sales yet.