What effect will this adjustment have on the accounting records? Unearned Fees 6,375 Fees Earned 6,375 increase revenues reported for the period increase net income decrease liabilities All of these choices are true.

Question

Business

Jordon Allison

19 July, 20:31

What effect will this adjustment have on the accounting records? Unearned Fees 6,375 Fees Earned 6,375 increase revenues reported for the period increase net income decrease liabilities All of these choices are true.

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Answers (1)

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Emery · Answer 1

All of these choices are true

Explanation:

Note that the accounting records in the question are merged and they are sorted first in order to answer the question correctly as follows:

Particulars Dr ($) Cr ($)

Unearned Fees 6,375

Fees Earned 6,375

The question is now answered as follows:

Unearned revenue refers to an amount of money that a company or an individual has already received for a goods or services to be delivered or provided in future.

Unearned revenue will not be recognized as income until when the goods or services to be delivered or provided.

Instead, unearned revenue will will be recorded as a liability in the balance sheet of the company as it indicates an amount of debt owed to the customers.

After the goods or services are delivered or provided, the unearned revenue will be transferred to earned revenue account, and this will reduce liabilities, increase revenue, and also increase net profit.

From this question, the adjustment indicates that services for the Unearned Fees have been provided and it is no longer a liability as Unearned Fees has now become Fees Earned. As a result, this will increase revenues reported for the period, increase net income, and decrease liabilities.

Therefore, the correct option is "All of these choices are true".