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

question 249

Multiple Choice

If a company failed to make the end-of-period adjustment to remove the amount earned from the Unearned Management Fees account,there would be:

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

---

Definitions:

Capital Gains

Capital gains are the profits realized from the sale of assets such as stocks, bonds, or real estate, which exceed the purchase price of these assets.

Stock Dividends

The payment of additional shares of a company to its existing shareholders instead of cash.

Stock Splits

A corporate action in which a company divides its existing stock into multiple shares to increase the liquidity of the shares, though the market capitalization remains the same.

Shareholder's Wealth

Shareholder's Wealth is the sum total of the capital value of a company's shares plus any retained earnings or losses. It represents the shareholders' stake in the company.