Question

7. For each of the following oversights, state whether total assets will be understated
(U), overstated (O), or not affected (NA).
_____ 1. Failure to record revenue earned but not yet received.
_____ 2. Failure to record expired prepaid rent.
_____ 3. Failure to record accrued interest on the bank savings account.
_____ 4. Failure to record accrued interest on outstanding loan.
_____ 5. Failure to record accrued income taxes.
_____ 6. Failure to recognize the earned portion of unearned revenues.
_____ 7. Failure to record depreciation.
_____ 8. Failure to record accrued salaries.

Answer 1

1. Failure to record revenue earned but not yet received. - Understated 2. Failure to record expired prepaid rent. - Overstated 3. Failure to record accrued interest on the bank savings account. - Understated 4. Failure to record accrued interest on outstanding loan. - Overstated 5. Failure to record accrued income taxes. - Not affected 6. Failure to recognize the earned portion of unearned revenues. - Not affected 7. Failure to record depreciation. - Overstated 8. Failure to record accrued salaries. - Not affected