If the Accountant Failed to Make the End-Of-Period Adjustment to Reduce

question 125

Multiple Choice

If the accountant failed to make the end-of-period adjustment to reduce the Unearned Management Revenue account by the amount of management revenue earned, the omission would cause

• A) an overstatement of profit
• B) an overstatement of assets
• C) an overstatement of liabilities
• D) an overstatement of equity
• E) an understatement of expenses

---

Definitions:

Dividends

Payments made by a corporation to its shareholder members, distributing a portion of the company's earnings.

Statement of Cash Flows

The statement of cash flows is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.

Financing Activities

Transactions related to raising capital and repaying investors, including issuing debt, obtaining loans, and dividend payments.

Operating Activities

Activities that relate to the primary operations of a company, like sales, services, and product creation.