Masterfalls Corporation purchased a one$-$year insurance policy in January $2021$ for

$$36,000.$ The insurance policy is in effect from March $2021$ through February $2022.$

If the company neglects to make the proper year$-$end adjustment for the expired

insurance

net income and assets will be overstated by $$6,000.$

net income and assets will be understated by $$6,000.$

net income and assets will be overstated by $$30,000.$

net income and assets will be understated by $$30,000.$