Question

A​ & D Window Cleaning performed​ $450 of services but has not yet billed customers for the month. If A​ & D fails to record the adjusting​ entry, what is the impact on the financial​ statements? A. balance​ sheet: assets​ understated; equity overstated income​ statement: expense understated B. balance​ sheet: liabilities​ overstated; equity understated income​ statement: revenues understated C. balance​ sheet: assets​ overstated, equity understated income​ statement: expenses understated D. balance​ sheet: assets​ understated, equity understated income​ statement: revenues understated

Answer 1

Answer:

D. balance​ sheet: assets​ understated, equity understated income​ statement: revenues understated

Explanation:

The adjusting entry is as follows:

Account receivable A/c Dr XXXXX

       To Service revenue A/c XXXXX

(Being the service performed is recorded)      

Since this above journal entry is not recorded that reflect the assets understated on the income statement due to which the equity, as well as the revenues, are also understated in the balance sheet and the income statement respectively