an accountant failed to record the adjusting entry for accrued revenues. how does this error affect the…

an accountant failed to record the adjusting entry for accrued revenues. how does this error affect the income statement?\n\na. the liabilities at the end of the period will be understated.\nb. the net income for the period will be overstated\nc. the net income for the period will be understated.\nd. the liabilities at the end of the period will be overstated.

an accountant failed to record the adjusting entry for accrued revenues. how does this error affect the income statement?\n\na. the liabilities at the end of the period will be understated.\nb. the net income for the period will be overstated\nc. the net income for the period will be understated.\nd. the liabilities at the end of the period will be overstated.

Answer

Brief Explanations:

Accrued revenues are revenues that have been earned but not yet received or recorded. The adjusting entry for accrued revenues is to debit Accounts Receivable (an asset) and credit Revenue. If this entry is not recorded, revenue (which is used to calculate net income) will be understated. Net income is calculated as Revenue - Expenses. With lower revenue, net income will be lower (understated). Liabilities are not affected by accrued revenue entries (accrued revenue affects assets and revenues, not liabilities).

Answer:

C. The net income for the period will be understated.