The accountant of Delta,Inc.failed to make an adjusting entry to record $6,000 of unearned service revenue that has now been earned.Assume the deferred revenue was initially recorded as a liability.Which of the following statements is true?
A)The total revenue will be overstated.
B)The total revenue will be understated.
C)The total expenses will be overstated.
D)The total expenses will be understated.

Question

Quizplus · Accepted Answer

The failure to record the adjusting entry for the earned service revenue will result in understating the total revenue. This is because the revenue was not recognized as being earned, so it was not recorded in the revenue account. Therefore, the total revenue will be lower than it should be, and the financial statements will not accurately reflect the company's performance.

The Accountant of Delta,Inc