Services were performed but not billed. What effect will this have on the income statement if an adjusting entry is not made? a. Liabilities will be understated. b. Expenses will be overstated. c. Net income will be understated. d. Revenues will be overstated.

Services were performed but not billed. What effect will this have on the income statement if an adjusting entry is not made? a. Liabilities will be understated. b. Expenses will be overstated. c. Net income will be understated. d. Revenues will be overstated.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Bookkeeping

Bookkeeping is the process of recording the financial transactions of a company on a regular basis. With the process of bookkeeping, companies can track important financial information that helps management in making crucial decisions.

Question

Services were performed but not billed. What effect will this have on the income statement if an adjusting entry is not made?

a. Liabilities will be understated.
b. Expenses will be overstated.
c. Net income will be understated.
d. Revenues will be overstated.

Definition Definition Entries made at the end of every accounting period to precisely replicate the expenses and revenue of the current period. This is also known as end of period adjustment. It can also refer to financial reporting that corrects errors made previously in the accounting period. Every adjustment entry affects at least one real account and one nominal account.

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