PRC-1 · Chapter 4 · Question 83 of 100
If an entity fails to record an adjusting entry for accrued revenue at year-end, what is the resulting effect on its total assets?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Total assets will be understated.
Explanation
Accrued revenue is an asset (a receivable). If it is not recorded, the total assets reported on the statement of financial position will be understated.
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