question 2\n5 points\nan architecture firm collected $2000 for architecture services to be provided in the…

question 2\n5 points\nan architecture firm collected $2000 for architecture services to be provided in the future and recorded it as a liability. no entry was made at the time the service was provided. if no adjusting entry is made, this would cause - select answer from the options below\na liabilities to be understated.\nb revenues to be overstated.\nc revenues to be understated.\nd net income to be overstated.

question 2\n5 points\nan architecture firm collected $2000 for architecture services to be provided in the future and recorded it as a liability. no entry was made at the time the service was provided. if no adjusting entry is made, this would cause - select answer from the options below\na liabilities to be understated.\nb revenues to be overstated.\nc revenues to be understated.\nd net income to be overstated.

Answer

Brief Explanations:

When the architecture firm collected cash for future services, it recorded a liability (unearned revenue). When the service is provided, the liability should be reduced and revenue should be recognized. If no adjusting entry is made, revenue will not be recorded, causing revenues to be under - stated. Liabilities will remain over - stated as the reduction is not recorded, and since revenues are under - stated, net income (which is revenues minus expenses) will also be under - stated.

Answer:

C. revenues to be understated.