Question

If a company fails to adjust for accrued revenues:______. a. assets will be understated and revenues will be understated. b. liabilities will be understated and revenues will be understated. c. liabilities will be overstated and revenues will be understated. d. assets will be overstated and revenues will be understated.

Answer 1

Answer:

a. assets will be understated and revenues will be understated

Explanation:

Revenue accrued is recorded as follows :

Account Receivable (debit)

Sales Revenue (credit)

Thus omission of this adjustment would result in Assets (Accounts Receivables) being understated and Revenues being understated as well.