An architecture firm earned $2000 for architecture services provided with the fee to be paid in the future.Nothing was recorded at the time the service was provided.If the fee has not been paid by the end of the accounting period and no adjustment is made this would cause:

Question

Quizplus · Accepted Answer

If the fee has not been paid and no adjustment is made, the revenues for the accounting period will be understated because the $2000 earned was not recorded. Additionally, there is no effect on net income or liabilities since the payment for the service has not yet been received.

An Architecture Firm Earned $2000 for Architecture Services Provided with the Fee