Unearned Revenue Was Not Adjusted to Show $3,000 of Revenue

question 162

Multiple Choice

Unearned revenue was not adjusted to show $3,000 of revenue earned during the current period. What is the effect of this error on the balance sheet?

• A)Liabilities are overstated.
• B)Liabilities are understated.
• C)Assets are overstated.
• D)Assets are understated.

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Definitions:

Sinuses

Air-filled cavities in the bones around the nose, which help moisten and filter inhaled air.

Medullary Cavities

The central cavities of bone shafts where red bone marrow and/or yellow bone marrow (fat) are stored, crucial for the process of hematopoiesis.

Epiphyseal Lines

The remnants of growth plates in long bones, indicating where bone lengthening occurred.

Articular Cartilage

The smooth, white tissue that covers the ends of bones where they come together to form joints, enabling smooth movement and absorbing shocks.