The R Real Estate Company owns an office building and prepares financial statements monthly. Financial statements will be prepared on January 31. The...

The R Real Estate Company owns an office building and prepares financial statements monthly. Financial statements will be prepared on January 31. The monthly rent for tenant T is $1,000. On January 1, tenant T paid $2,000, representing rent for 2 months, January and February. On January 1, which of the following is true on the accounting records of R Real Estate?

1.Assets decreased.

2.Liabilities increased.

3.Revenues decreased.

4.Expenses increased.

Explain why.