The accounts of a business, before an adjusting entry is made to record accrued revenue, reflect an:
A)understated liability and an overstated revenue.
B)overstated asset and an understated revenue.
C)understated expense and an overstated revenue.
D)understated asset and an understated revenue.

Question

Quizplus · Accepted Answer

Before adjusting for accrued revenue, the asset (receivable) and the revenue are both understated because the revenue has been earned but not yet recorded.

The Accounts of a Business, Before an Adjusting Entry Is