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 liabilities.
B) An overstatement of assets.
C) An understatement of liabilities.
D) An overstatement of net income.
E) An overstatement of equity.

Question

Quizplus · Accepted Answer

The omission would cause an overstatement of liabilities because the Unearned Management Fees account, which is a liability account, would not be reduced by the amount of fees that were actually earned.

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