Identify the effect (a through h) that omitting each of the following items would have on the balance sheet.
-Services provided to customers on the last day of the month were not billed.
A)Assets and owner's equity overstated
B)Assets and owner's equity understated
C)Assets overstated and owner's equity understated
D)Assets understated and owner's equity overstated
E)Liabilities and owner's equity overstated
F)Liabilities and owner's equity understated
G)Liabilities overstated and owner's equity understated
H)Liabilities understated and owner's equity overstated

Question

Quizplus · Accepted Answer

Not billing for services provided results in not recognizing revenue earned, which understates assets (accounts receivable) and owner's equity (retained earnings or owner's capital) because the income that would increase both is not recorded.

Identify the Effect (A Through H) That Omitting Each of the Following