Which of the following reflect the balances of prepayment accounts prior to adjustment?

 

Balance sheet accounts are overstated and income statement accounts are overstated.

Balance sheet accounts are understated and income statement accounts are overstated.

Balance sheet accounts are overstated and income statement accounts are understated.

Balance sheet accounts are understated and income statement accounts are understated.

 

 

If an adjustment is needed for unearned revenues, the

 

liability is overstated and the related revenue is understated before adjustment.

liability is understated and the related revenue is overstated before adjustment.

liability and related revenue are understated before adjustment.

liability and related revenue are overstated before adjustment.

 

 

If a company fails to make an adjusting entry to record supplies expense, then

 

owner’s equity will be understated.

assets will be understated.

net income will be understated.

expense will be understated.

 

 

Which of the following would not result in unearned revenue?

 

Sale of two-year magazine subscriptions

Sale of season tickets to football games

Rent collected in advance from tenants

Services performed on account

 

 

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