Question: EXERCISE 61 1. In preparing its Year 9 adjusting entries, the Singapore Company neglected to adjust rental fees received in advance for the amount of

EXERCISE 6–1 1. In preparing its Year 9 adjusting entries, the Singapore Company neglected to adjust rental fees received in advance for the amount of rental fees earned during Year 9. What is the effect of this error?

a. Net income is understated, retained earnings are understated, and liabilities are overstated.

b. Net income is overstated, retained earnings are overstated, and liabilities are unaffected.

c. Net income, retained earnings, and liabilities all are understated.

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