The Year-End Adjustment to Recognize One Month's Work on the Three-Month

Multiple Choice

The year-end adjustment to recognize one month's work on the three-month contract results in a $2,000 decrease in liabilities (unearned revenue) and an increase in equity (retained earnings due to recognizing revenue) .
The following account balances were drawn from the 2016 financial statements of Grayson Company:

-Jason Company paid $7,200 for one year's rent in advance beginning on October 1,2015.Jason's 2015 income statement would report rent expense,and its statement of cash flows would report cash outflow for rent,respectively,of

A) $7,200;$7,200
B) $1,800;$1,800
C) $1,800;$7,200
D) $1,200;$7,200