What will happen if a business does not make an adjustment at the end of the period to record an accrued expense?

an understatement of assets and an understatement of revenues. accrued revenues and accrued expenses. If prepaid expenses are initially recorded in expense accounts and have not all been used at the end of the accounting period, then failure to make an adjusting entry will cause. assets to be understated.

What is the adjusting entry to record an accrued expense?

Usually, an accrued expense journal entry is a debit to an Expense account. The debit entry increases your expenses. You also apply a credit to an Accrued Liabilities account. The credit increases your liabilities.

What is unearned revenue reported as in financial statements?

Unearned revenue is recorded on a company’s balance sheet as a liability. It is treated as a liability because the revenue has still not been earned and represents products or services owed to a customer. Unearned revenue is usually disclosed as a current liability on a company’s balance sheet.

What will happen to the accounts when adjusting entries are not booked?

If the adjusting entry is not made, assets, owner’s equity, and net income will be overstated, and expenses will be understated. Failure to do so will result in net income and owner’s equity being overstated, and expenses and liabilities being understated.

What happens if a company fails to adjust for accrued expenses?

If a company fails to adjust for accrued expenses, what effect will this have on that month’s financial statements? Expenses will be understated and net income and stockholders’ equity will be overstated. Expenses will be understated and net income and stockholders’ equity will be overstated.

Which of the following is an example of unearned income?

Examples of unearned income include interest from savings accounts, bond interest, alimony, and dividends from stock.