Which of the Following Will Happen If the Accrual Adjusting

question 86

Multiple Choice

Which of the following will happen if the accrual adjusting entry is not made for revenue earned but unrecorded?

• A) Assets will be understated and revenues will be overstated.
• B) Revenues will be understated and assets will be overstated.
• C) Both revenues and assets will be overstated.
• D) Both revenues and assets will be understated.

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Definitions:

Personnel Expenses

Costs associated with employing personnel, including wages, benefits, training, and other related expenses.

Spending Variance

A metric that compares the actual cost of production against the budgeted or standard cost, highlighting over or under spending.

Materials

The physical commodities used in the production of goods, ranging from raw materials to fully fabricated components.

Spending Variance

The difference between the actual spending and the budgeted or planned spending amount in a given period.