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

Question

Quizplus · Accepted Answer

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

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