Ask Question
25 May, 21:54

The accountant of Omega, Inc. 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 understated.

B. The total expenses will be overstated.

C. The total expenses will be understated.

D. The total revenue will be overstated.

+2
Answers (1)
  1. 25 May, 23:23
    0
    The answer is A. The total revenue will be understated

    Explanation:

    Unearned revenue is when the amount or money has been received before providing the service. For example, a manufacturer has received money from a customer for a product that will be delivered over a period of time, let's say every month.

    Unearned revenue is a liability but the failure to make an adjusting entry in the income statement will understate revenue because as the product is being delivered monthly, the accountant should be recognizing it as revenue in the Income statement. As this is recognized as revenue, unearned revenue account decreases with the same amount monthly
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “The accountant of Omega, Inc. failed to make an adjusting entry to record $6,000 of unearned service revenue that has now been earned. ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers