Question

Failure to prepare an adjusting entry at the end of a period to record an accrued revenue would cause Group of answer choices net income to be overstated. an understatement of assets and an understatement of revenues. an understatement of revenues and an understatement of liabilities. an understatement of revenues and an overstatement of liabilities.

Answer 1

Answer:

an understatement of assets and an understatement of revenues.

Explanation:

Financial accounting is an accounting technique used for analyzing, summarizing and reporting of financial transactions like sales costs, purchase costs, payables and receivables of an organization using standard financial guidelines such as Generally Accepted Accounting Principles (GAAP). Examples of financial statements includes Balance sheet, cash-flow and income statement.

Financial reporting can be defined as the formal communication or disclosure of financial information and statements to present and potential users such as investors and creditors.

Hence, failure to prepare an adjusting entry at the end of a period to record an accrued revenue would cause an understatement of assets and an understatement of revenues.