If an entity fails to adjust a Prepaid rent account for rent that has expired, what effect will this have on that month's financial statements?

Select one:

a. Failure to make an adjustment does not affect the financial statements.

b. Expenses will be overstated and profit and equity will be understated.

c. Assets will be overstated and profit and equity will be understated.

d. Assets will be overstated and profit and equity will be overstated.