Question: What is the effect on the financial statements when a company fails to adjust the unearned revenue account for revenues earned at year - end?

What is the effect on the financial statements when a company fails to adjust the unearned revenue account for revenues earned at year-end?
Multiple Choice
Revenues are understated and stockholders' equity is overstated.
Net income is understated and liabilities are overstated.
Net income is understated and assets are understated.
Revenues are understated and liabilities are understated.

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