If Unearned Revenues Are Initially Recorded in Revenue Accounts and Have

question 94

Multiple Choice

If unearned revenues are initially recorded in revenue accounts and have not all been earned at the end of the accounting period, then failure to make an adjusting entry will cause

• A) liabilities to be overstated.
• B) revenues to be understated.
• C) revenues to be overstated.
• D) accounts receivable to be overstated.

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Definitions:

Consumption

The use of goods and services by households, affecting economic conditions and indicating economic health through consumer spending patterns.

Income

The monetary payment received by an individual or household for their services, investments, or transfer payments.

Interest Rate

The percentage of an amount of money charged by a lender to a borrower for the use of their funds over a period of time, typically expressed as an annual percentage.

Present Value

The current worth of future cash flows discounted at an appropriate discount rate, reflecting the time value of money.