Failure to Prepare an Adjusting Entry at the End of a Period

question 42

Multiple Choice

Failure to prepare an adjusting entry at the end of a period to record accrued revenue would cause

• A)profit to be overstated.
• B)an understatement of assets and an understatement of revenues.
• C)an understatement of revenues and an understatement of liabilities.
• D)an understatement of revenues and an overstatement of liabilities.

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Definitions:

Elastic

A characteristic of goods or services with demand sensitive to changes in price, wherein a small change in price leads to a significant change in the quantity demanded or supplied.

Complementary Products

Goods or services that are used together, enhancing the value of each other when consumed or utilized in combination.

Price Inelastic

A situation in which the demand for a product does not change significantly in response to a change in its price.

Quantity Demanded

The total amount of a product that consumers are willing and able to purchase at a specific price in a given time period.