If a company failed to make the end-of-period adjustment to move the amount of management fees that were earned from the Unearned Management Fees account to the Management Fees Revenue account,this 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 liabilities.

Question

Quizplus · Accepted Answer

The omission would cause an overstatement of liabilities because the Unearned Management Fees account, a liability account, would not be reduced by the amount that should have been recognized as revenue.

If a Company Failed to Make the End-Of-Period Adjustment to Move