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morpeh [17]
3 years ago
8

Failure to prepare an adjusting entry at the end of a period to record an accrued revenue would cause:A)net income to be oversta

ted.B)an understatement of assets and an understatement of revenues.C)an understatement of revenues and an understatement of liabilities.D)an understatement of revenues and an overstatement of liabilities.
Business
1 answer:
klemol [59]3 years ago
3 0

Answer:

B) An understatement of assets and understatement of revenues

Explanation:

Accrued revenues are revenues that are earned but are still collectible.

That means the adjusting entry should have been:

<em>Debit</em> to Accounts Receivable <em>and</em>

<em>Credit</em> to Revenue

If the company failed to prepare this adjusting entry then the Accounts Receivable will not be recorded and thus will understate the Asset since Accounts Receivable is an Asset.

The same goes for revenue, if not recorded, will understate Revenue.

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3 years ago
New Business is just being formed by 10 investors, each of whom will own 10% of the business. The firm is expected to earn $500,
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Answer:

additional income is $11050  if the business is organized as a partnership rather than as a corporation

Explanation:

given data

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own = 10%

earn =  $500000

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personal tax rate = 35 %

to find out

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solution

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income if formed as corporation = earn × own ( 1 -  corporate tax ) × ( 1 - personal tax )

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income if formed partnership = $32500

so

additional income is $32500 - $21450

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3 years ago
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