The Accounts of a Business Before an Adjustment Is Made

question 29

Multiple Choice

The accounts of a business before an adjustment is made to record accrued revenue reflect an:

• A)understated liability and an overstated revenue.
• B)overstated asset and an understated revenue.
• C)understated expense and an overstated revenue.
• D)understated asset and an understated revenue.

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Definitions:

Income

The amount of money or equivalent value received by an individual or entity in return for labor or services provided, from investments, or from other sources.

Net Demand

The difference between the total demand for a product or service and the total supply of it in the market.

Endowment

In economics, the total resources available to an individual or entity, including assets, income, and inherited resources.

Net Demand

The difference between total market demand and market supply, representing the excess demand or shortage in the market.