Question

At the end of the year, the accountant for Metro Inc. failed to record fees earned...

At the end of the year, the accountant for Metro Inc. failed to record fees earned by the company during the year, the effect of this error would be:

a) an overstatement of assets and an undertstatement of net income.

b) an understatement of assets and an overstatement of net income.

c) an overstatement of assets and net income.

d) an understatement of assets and net income

e) None of the above

Homework Answers

Answer #1

a) overstatement of assets and understatement of net income

Explanation:

if the fees earned in not recorded in income statement then the profit earned will also be less i.e understated.

Normally profit earned in the income statement is transferred to balance sheet liability side and is added to capital(or reserves and surplus in some cases). And here if the same understated profit is transferred to liabilty side in balance sheet then liabilities will be understated. It means the asset side i.e, assets are overstated.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The accountant failed to make the adjusting entry to record the depreciation for the year. This...
The accountant failed to make the adjusting entry to record the depreciation for the year. This error would cause a. an understatement of shareholders' equity. b. an understatement of liabilities. c. an overstatement of expenses. d. an overstatement of assets.
The accountant failed to make the adjusting entry to record the unpaid wages of its employees...
The accountant failed to make the adjusting entry to record the unpaid wages of its employees as of December 31. This error will cause an understatement of liabilities and an overstatement of shareholders' equity. an overstatement of assets, liabilities, and shareholders' equity. an understatement of expenses, liabilities, and shareholders' equity. an understatement of assets and liabilities.
39. The accountant of Omega Consulting failed to make an adjusting entry to record $6,000 for...
39. The accountant of Omega Consulting failed to make an adjusting entry to record $6,000 for unearned service revenues that were earned before the end of the fiscal year. Assume the company initially recorded a liability. Which of the following statements is true? A.The total liabilities will be overstated. B.The total assets will be overstated. C.The total assets will be understated. D.The total liabilities will be understated
Zinke Company understated its ending inventory at the end of Year 1. Which of the following...
Zinke Company understated its ending inventory at the end of Year 1. Which of the following correctly states the effect of the error on the amounts shown on the Year 1 financial statements? Understatement of total assets and gross margin. Understatement of liabilities and retained earnings. Overstatement of cost of goods sold and retained earnings. Overstatement of total assets and cost of goods sold.
At the end of the current year, $23,550 of fees have been earned but have not...
At the end of the current year, $23,550 of fees have been earned but have not been billed to clients. Required: A. Journalize the December 31 adjusting entry to record the accrued fees. Refer to the Chart of Accounts for exact wording of account titles. B. If the cash basis rather than the accrual basis had been used, would an adjusting entry have been necessary?
      In the balance sheet at the end of its first year of operations, ABC Inc....
      In the balance sheet at the end of its first year of operations, ABC Inc. reported an allowance for doubtful accounts of $80,500. During that year, ABC wrote off $33,000 of accounts receivable it had attempted to collect and failed. Credit sales for the year were $2,260,000, and cash collections from credit customers totaled $1,900,000. What bad debt expense would ABC report in its first year income statement?             A) $80,500         B) $47,500            C) $113,500 D) None of...
16.When constructing a depreciation schedule, the accountant must remember that the book value at the end...
16.When constructing a depreciation schedule, the accountant must remember that the book value at the end of the asset's life must be equal to the a. depreciable cost    b. cost    c. book value   d. salvage value 17. Clark sold an asset this year for $4,000, but the book value of the asset was $7,000. What effect will this transaction have on the income statement for the year?   A. an increase in net income   b. a decrease in net income   c....
In taking a physical inventory at the end of year 2011, Nadir Company forgot to count...
In taking a physical inventory at the end of year 2011, Nadir Company forgot to count certain units. Indicate how this error affects the following:     (a) 2011 cost of goods sold. a.Overstates 2011 cost of goods sold. b.Understates 2011 cost of goods sold. c.None of the above    (b) 2011 gross profit. a. Understates 2011 gross profit. b. Overstates 2011 gross profit. c. None of the above.     (c) 2011 net income. a.Understates 2011 net income. b. Overstates 2011...
Selected account balances before adjustment for Alantic Coast Realty at July 31, 2016, the end of...
Selected account balances before adjustment for Alantic Coast Realty at July 31, 2016, the end of the current year, are as follows: Debits Credits Accounts Receivable $ 75,000 Equipment 345,700 Accumulated Depreciation—Equipment $112,500 Prepaid Rent 9,000 Supplies 3,350 Wages Payable – Unearned Fees 12,000 Fees Earned 660,000 Wages Expense 325,000 Rent Expense – Depreciation Expense – Supplies Expense – Data needed for year-end adjustments are as follows: a. Unbilled fees at July 31, $11,150. b. Supplies on hand at July...
Assume that Whisper Company failed to write down inventory to lower of cost or net realizable...
Assume that Whisper Company failed to write down inventory to lower of cost or net realizable value at the end of 2017, and the related goods were sold in 2018. Ignoring taxes, what effect would this error have on the following items? (circle your answer for each, 8 points in total) Net Income for 2017          INCREASE           DECREASE             NO EFFECT Net income for 2018          INCREASE           DECREASE             NO EFFECT          Cash Flow from                  INCREASE           DECREASE             NO EFFECT Operations for 2017 Retained...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT