If an adjusting entry were not made at the end of an accounting period to remove the earned revenue from the Unearned Revenue account,

Question

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If an adjusting entry were not made at the end of an accounting period to remove the earned revenue from the Unearned Revenue account, the liability for unearned revenue would be overstated. This would mean that the amount of liabilities on the balance sheet would be higher than it should be, which could lead to incorrect financial analysis and decision-making.

If an Adjusting Entry Were Not Made at the End