The accountant of Delta Company failed to make an adjusting entry to record $6,000 of unearned service revenue that has now been earned.Assume the deferred revenue was initially recorded as a liability.Which of the following statements is true?
A)The total revenue will be overstated.
B)The total revenue will be understated.
C)The total expenses will be overstated.
D)The total expenses will be understated.

Question

Quizplus · Accepted Answer

The failure to make an adjusting entry to record the earned revenue will result in the total revenue being understated. This is because the revenue will not be recognized in the income statement, resulting in a lower reported revenue.

The Accountant of Delta Company Failed to Make an Adjusting