Throughout an accounting period, the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Service Revenue. If the accountantfails to make the end-of-period adjusting entry to record the portion of these fees that has been earned, one effect will be:
A)An understatement of assets.
B)An understatement of equity.
C)An overstatement of profit.
D)An understatement of liabilities.
E)An overstatement of equity.

Question

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The Answer of Throughout an accounting period, the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Service Revenue. If the accountantfails to make the end-of-period adjusting entry to record the portion of these fees that has been earned, one effect will be:
A)An understatement of assets.
B)An understatement of equity.
C)An overstatement of profit.
D)An understatement of liabilities.
E)An overstatement of equity.

Throughout an Accounting Period, the Fees for Legal Services Paid