单选题

HVG, LLC paid $12,000 of cash to a real estate company upon signing a leaseon 31 December 2015. The payment represents a $4,000 security deposit and$4,000 of rent for each of January 2016 and February 2006. Assuming that thecorrect accounting is to reflect both January and February rent as prepaid, themost likely effect on HVG' s accounting equation in December 2015 is（）。

A、 no net change in assets.
B、 a decrease in assets of $8,000.
C、 a decrease in assets of $12,000.

【正确答案】 A

【答案解析】

The payment of January rent represents prepaid rent (an asset), which wil/be adjusted at the end of January to record rent expense. Cash (an asset) decreases by $12,000. Deposits (an asset) increase by $4,000. Prepaid rent (an asset) increases by $8,000. There is no net change in assets.