Failure to prepare an adjusting entry at the end of a period to record accrued revenue would cause
A)profit to be overstated.
B)an understatement of assets and an understatement of revenues.
C)an understatement of revenues and an understatement of liabilities.
D)an understatement of revenues and an overstatement of liabilities.

Question

Quizplus · Accepted Answer

Accrued revenue is revenue that has been earned but not yet recorded. Failing to record it results in both assets (receivables) and revenues being understated.

Failure to Prepare an Adjusting Entry at the End of a Period