If a Company Fails to Adjust an Unearned Rent Revenue

question 218

Multiple Choice

If a company fails to adjust an Unearned Rent Revenue account for revenue that should be recognized, what effect will this have on that month's financial statements?

• A)Assets will be understated and revenues will be understated.
• B)Liabilities will be understated and revenues will be understated.
• C)Liabilities will be overstated and revenues will be understated.
• D)Assets will be overstated and revenues will be understated.

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Definitions:

Simplicity

The quality or condition of being easy to understand or do.

Closure

The psychological process of seeking resolution and finality to unresolved matters, often related to trauma, loss, or relationship issues.

Gestalt Principle

A theory in psychology that proposes the mind integrates pieces of sensory information into whole perceptions or patterns, emphasizing the importance of context and wholes in perception.

Proximity

The physical or psychological nearness or closeness between people, objects, or concepts, which can influence interactions and perceptions.