The Accountant for the Grassroots Company Failed to Make an Adjusting

question 47

Multiple Choice

The accountant for the Grassroots Company failed to make an adjusting entry to record revenue earned but not yet billed to customers.The effect of this error is:

• A)An overstatement of assets and of net income offset by an understatement of owners' equity.
• B)An overstatement of net income and an understatement of assets.
• C)An understatement of assets,net income,and owners' equity.
• D)An overstatement of liabilities offset by an understatement of owners' equity.

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Definitions:

Supply-Side Effect

Economic effects that result from changes in production capacity and costs, influencing the aggregate supply in the economy.

Tax Rates

The percentage at which an individual or corporation is taxed, applied to income or transactions.

Potential GDP

The highest level of economic output that an economy can sustain over the long term without increasing inflation.

Capital Spending

Expenditure by businesses on physical assets like buildings, machinery, and equipment to enhance their capacity or efficiency.