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

question 64

Multiple Choice

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

• A) net income 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:

Financial Ratios

Quantitative measures derived from financial statements used to evaluate a company's financial performance, health, and risks.

Previous Years

Referring to the years before the current one, often used in contexts of analysis, comparison, or financial performance evaluation.

Pro Forma Financial Statements

Forward-looking financial documents that project a business’s future financial performance based on certain assumptions.

Financial Condition

The status of an organization or individual's financial health, typically assessed through analysis of assets, liabilities, income, and expenditures.