True North Real Estate Management failed to adjust its Unearned Rent Revenue account for the $15,000 that had been earned during the current year.What effect does this omission have on the current year financial statements?
A)Assets are understated by $15,000.
B)Revenues are overstated by $15,000.
C)Expenses are understated by $15,000.
D)Liabilities are overstated by $15,000.

Question

Quizplus · Accepted Answer

The omission means that the Unearned Rent Revenue, a liability, was not reduced by $15,000 to reflect the revenue earned. This results in liabilities being overstated.

True North Real Estate Management Failed to Adjust Its Unearned