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 balance sheet?\na. the liabilities at the end of the period will be overstated.\nb. the liabilities at the end of the period will be understated.\nc. the assets at the end of the period will be understated.\nd. the assets 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 balance sheet?\na. the liabilities at the end of the period will be overstated.\nb. the liabilities at the end of the period will be understated.\nc. the assets at the end of the period will be understated.\nd. the assets at the end of the period will be overstated.

Answer

Brief Explanations:

Accrued revenues are revenues that have been earned but not yet received in cash. The adjusting entry for accrued revenues is to debit Accounts Receivable (an asset) and credit Revenue. If this entry is not recorded, the asset (Accounts Receivable) will not be recognized. So, assets will be understated. Liabilities are not affected by accrued revenue adjusting entries.

Answer:

C. The assets at the end of the period will be understated.