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:

Original Purchase Invoice

A document provided by a seller to a buyer detailing the items purchased, the quantity, and the price, serving as a proof of transaction and ownership.

Goodwill

An intangible asset representing the value of a company's brand, customer relations, reputation, and other non-physical assets that contribute to earnings.

Special Discount

A unique or exclusive reduction in the price of goods or services, often offered for a limited time or to specific customers.

De-emphasize

To make something less prominent or reduce its emphasis in comparison to other aspects.