A publishing company records the subscriptions paid in advance by its customers in an account called Unearned Subscription Revenue.If the company fails to make the end-of-period adjusting entry to record the portion of the subscriptions that have been earned,one effect will be:
A)An overstatement of equity
B)An overstatement of liabilities
C)An understatement of assets
D)An understatement of liabilities
E)An overstatement of assets

Question

Quizplus · Accepted Answer

The failure to adjust Unearned Subscription Revenue will result in an overstatement of liabilities, as the revenue that has been earned is still recorded as a liability.

A Publishing Company Records the Subscriptions Paid in Advance by Its