An architecture firm earned $2,000 for architecture services provided with the fee to be paid in the future.No entry was made at the time the service was provided.If the fee has not been paid by the end of the accounting period and no adjusting entry is made, this would cause:
A)revenues to be overstated.
B)net income to be overstated.
C)liabilities to be understated.
D)revenues to be understated.

Question

Quizplus · Accepted Answer

Revenues would be understated because the earned income has not been recorded, which would also result in net income being understated.

An Architecture Firm Earned $2,000 for Architecture Services Provided with the Fee