The Accountant for Duman Legal Services Failed to Make an Adjusting

question 28

Multiple Choice

The accountant for Duman Legal Services failed to make an adjusting entry for supplies that had been used for the year.Which of the following is TRUE?

• A) Total liabilities are overstated.
• B) Total liabilities are understated.
• C) Total assets are overstated.
• D) Total assets are understated.

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Definitions:

Fund Replenishing

The process of adding money to a fund to restore its level after expenses have been incurred.

Making Payments

This process involves the transfer of funds from one party to another to settle a financial obligation or purchase.

Cash Equivalents

Investments with a short duration, easily turned into cash, and having an original maturity of no longer than three months, which are both highly liquid and quickly convertible into precise cash sums.

Short-Term Receivables

Current assets representing amounts due to be received by a company within a short period, typically within a year, from customers or clients.