If a Company Failed to Make the End-Of-Period Adjustment to Move

question 242

Multiple Choice

If a company failed to make the end-of-period adjustment to move the amount of management fees that were earned from the Unearned Management Fees account to the Management Fees Revenue account, this omission would cause:

• A) An overstatement of liabilities.
• B) An overstatement of assets.
• C) An understatement of liabilities.
• D) An overstatement of net income.
• E) An overstatement of equity.

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Definitions:

Horizontal Acquisition

The purchase of a company operating at the same level of the value chain in similar or different industries to increase market share.

Vertical Acquisition

A corporate strategy where a company acquires another company in the same supply chain.

Conglomerate Acquisition

The process by which a large corporation, often with diversified interests, acquires another company often in an unrelated industry to diversify its holdings.

Horizontal Acquisition

The purchase of a competing company in the same industry, aiming to increase market share or achieve economies of scale.