The accounts of a business before an adjusting entry is made to record an accrued revenue reflect an
A) understated liability and an overstated owner's capital.
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

Accrued revenues are revenues that have been earned but not yet recorded in the accounts. Before the adjusting entry is made, the asset (accounts receivable) is understated because the revenue has not been recorded, and the revenue is also understated because it has not been recognized in the financial statements yet.

The Accounts of a Business Before an Adjusting Entry Is