If an adjustment for accrued income is omitted from the financial reports the effect is:
A) assets are understated; profit is understated.
B) assets are overstated; profit is understated.
C) assets are understated; profit is overstated.
D) assets are overstated; profit is overstated.

Question

Quizplus · Accepted Answer

When an adjustment for accrued income is omitted, it means that the income earned but not yet received is not recorded. This leads to assets being understated because the receivable income is not recognized, and profit is also understated because the income that should have been recorded in the period is omitted.

If an Adjustment for Accrued Income Is Omitted from the Financial