Which of the following reflect the balances of prepayment accounts prior to adjustment?

A: Balance sheet accounts are overstated and income statement accounts are overstated.

B: Balance sheet accounts are understated and income statement accounts are understated.

C: Balance sheet accounts are overstated and income statement accounts are understated.

D: Balance sheet accounts are understated and income statement accounts are overstated.

In calculating depreciation, the number of years of useful life of the asset is

A:known with certainty.

B:an estimate.

C: based on the cost of the asset.

D: the estimated time period before repairs or maintenance will be required.

An adjusting entry

A: affects two income statement accounts.

B: is always a compound entry.

C: affects two balance sheet accounts.

D: affects a balance sheet account and an income statement account.