Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 24 - No. 31)
If a company does not make an adjusting entry for earned but unbilled revenue, what effect does this have?
Assets and equity are understated.
Assets and equity are overstated.
Liabilities and equity are understated.
Liabilities and equity are overstated.
Explanation
Failing to record it means Accounts Receivable (an asset) and Revenue (which affects equity) are understated.
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