The business failed to close any of the revenue accounts. The result of this error is that:
A) revenues will be understated.
B) capital will be understated.
C) the assets will be overstated.
D) the liabilities will be overstated.

Question

Quizplus · Accepted Answer

When revenue accounts are not closed, the income summary does not reflect the earned revenues, which in turn means that the amount transferred to the owner's capital account is less than it should be. This results in the capital being understated.

The Business Failed to Close Any of the Revenue Accounts