If an adjusting entry is not made at the end of an accounting period to remove the earned revenue from the Unearned Revenue account,
A)assets would be understated.
B)owner's equity would be overstated.
C)liabilities would be understated.
D)liabilities would be overstated.

Question

Quizplus · Accepted Answer

If an adjusting entry is not made to remove the earned revenue from the Unearned Revenue account, the liability for unearned revenue will be overstated, leading to an overstatement of owner's equity. This is because the revenue has been earned and should have been recognized as revenue, while the liability remains on the balance sheet.

If an Adjusting Entry Is Not Made at the End