Kuruvilla, Inc. closes its books at the end of each quarter. It records an adjusting journal entry that debits rent expense and credits prepaid rent. Which of the following statements does not correctly describe the effect on the general ledger of Kuruvilla, Inc.?

Multiple Choice

• The entry increases expenses and decreases stockholders' equity.

• The entry decreases net income and decreases assets.

• The entry decreases net income and decreases liabilities

• The entry increases expenses and decreases current assets.