At the end of August, the first month of the business year, the usual adjustment transferring rent
Question:
At the end of August, the first month of the business year, the usual adjustment transferring rent earned of $36,750 to a revenue account from the unearned rent account was omitted. Indicate which items will be incorrectly stated because of the error on
(a) The income statement for August
(b) The balance sheet as of August 31. Also indicate whether the items in error will be overstated or understated.
Step by Step Answer:
a Rent revenue or revenues will be understated by ...View the full answer
Related Video
Unearned revenue is money received by an individual or company for a service or product that has yet to be provided or delivered. It can be thought of as a \"prepayment\" for goods or services that a person or company is expected to supply to the purchaser at a later date. As a result of this prepayment, the seller has a liability equal to the revenue earned until the good or service is delivered. This liability is noted under current liabilities, as it is expected to be settled within a year.
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