Which of the Following Will Happen If the Accrual Adjusting

question 117

Multiple Choice

Which of the following will happen if the accrual adjusting entry is not made for revenue earned but not yet recorded?

• A)Assets will be understated and revenues will be overstated.
• B)Revenues will be understated and assets will be overstated.
• C)Both revenues and assets will be overstated.
• D)Both revenues and assets will be understated.

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Definitions:

Insurance

A financial product that provides protection against financial losses from specified risks, such as accidents, theft, or natural disasters.

Fiscal Year

A one-year period that companies and governments use for accounting purposes and preparing financial statements, which may or may not align with the calendar year.

Capital

Financial assets or the financial value of assets, such as funds held in deposit accounts, as well as the tangible machinery and production equipment used in environments such as factories.

Book Of Final Entry

Book that receives information about business transactions from a book of original entry (a journal). Example: a ledger.