If Unearned Revenues Are Initially Recorded in Revenue Accounts and Not

question 93

Multiple Choice

If unearned revenues are initially recorded in revenue accounts and not all the related services been performed at the end of the accounting period, the failure to make an adjusting entry will cause

• A)liabilities to be overstated.
• B)revenues to be understated.
• C)revenues to be overstated.
• D)accounts receivable to be overstated.

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Definitions:

Excludable

A feature of a product or service that enables the owner to restrict its use by others without obtaining consent.

Rival In Consumption

Describes a good or service whose consumption by one individual prevents simultaneous consumption by other individuals, making it exclusive in nature.

Common Resource

A resource like fish stocks, forests, or clean air, that provides users with tangible benefits but is susceptible to overuse and depletion.

Public Good

An offering of products or services to every member of society at no cost, provided by either governmental bodies or private organizations, without aiming for financial gain.