State the effect the following situation would have on the amount of annual net income reported for 2019. No adjustment was made for the revenue earned previously recorded as unearned revenue for USD 6,000 as of 2019 December 31. Group of answer choices Net income is overstated, liabilities are understated Net income is understated, assets are overstated Net income is overstated, assets are overstated Net income is understated, liabilities are overstated
State the effect the following situation would have on the amount of annual net income reported for 2019. No adjustment was made for the revenue earned previously recorded as unearned revenue for USD 6,000 as of 2019 December 31. Group of answer choices Net income is overstated, liabilities are understated Net income is understated, assets are overstated Net income is overstated, assets are overstated Net income is understated, liabilities are overstated
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
State the effect the following situation would have on the amount of annual net income reported for 2019. No adjustment was made for the revenue earned previously recorded as unearned revenue for USD 6,000 as of 2019 December 31.
Group of answer choices
Net income is overstated, liabilities are understated
Net income is understated, assets are overstated
Net income is overstated, assets are overstated
Net income is understated, liabilities are overstated
Expert Solution
Step 1
Unearned Revenue is money received from customer for which money has received but product/services are not delivered . It treated as Liability until product/services are not delivered.
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