The Accountant of Delta Company Failed to Make an Adjusting

question 100

Multiple Choice

The accountant of Delta Company failed to make an adjusting entry to record $6,000 of unearned service revenue that has now been earned.Assume the deferred revenue was initially recorded as a liability.Which of the following statements is true?

• A)The total revenue will be overstated.
• B)The total revenue will be understated.
• C)The total expenses will be overstated.
• D)The total expenses will be understated.

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Definitions:

Cash Discount

A deduction from the invoice price that a seller allows to a buyer in return for paying the bill early.

Invoice

A document sent to a buyer that specifies the quantities and costs of the products or services provided by the seller.

Quick Assets

Highly liquid assets, including cash, accounts receivable, and marketable securities, which can be quickly converted into cash.

Short-Term Investments

Short-term investments are financial assets that are expected to be converted into cash within one year and are typically used by firms to manage surplus cash efficiently.