If the accountant failed to make the end-of-period adjustment to reduce the Unearned Management Fees account by the amount of management fees earned,the omission would cause:
A) An overstatement of net income.
B) An overstatement of assets.
C) An overstatement of liabilities.
D) An overstatement of equity.
E) An understatement of expenses.

Question

Quizplus · Accepted Answer

The omission would cause an overstatement of liabilities because the Unearned Management Fees account, a liability, would not be reduced to reflect the fees that have been earned.

If the Accountant Failed to Make the End-Of-Period Adjustment to Reduce