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Effect of Omitting Adjusting Entry The adjusting entry for accrued fees was omitted at the end...

Effect of Omitting Adjusting Entry The adjusting entry for accrued fees was omitted at the end of the current year. Indicate which items will be in error, because of the omission, on (a) the income statement for the current year and (b) the balance sheet at the end of the year. Also indicate whether the items in error will be overstated or understated. a. Income Statement Revenues Expenses Net Income b. Balance Sheet Assets Liabilities Owner’s equity

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Expert Solution

a
Income Statement:
Revenues Understated
Expenses No effect
Net Income Understated
b
Balance Sheet :
Assets Understated
Liabilities No effect
Owner’s equity Understated
The failure to record adjusting entry for accrued fees will understate revenues, net income, Assets( Accounts Receivable) and Owner's Equity

ekkarill92 answered 2 years ago
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