Effect of Omitting Adjustment (please help!) At the end of August, the first mon

Question

Effect of Omitting Adjustment (please help!)

At the end of August, the first month of the business year, the usual adjustment transferring rent earned of $36,750 to a revenue account from the unearned rent account was omitted. Indicate whether each of the items below will be overstated or understated as a result of the omission. Also indicate which financial statement is affected by each error Account Rent revenue (or revenues) Net income Stockholders' equity (retained earnings) Unearned rent (or liabilities) Overstated/Understated Select Select Select Select Financial Statement Select Select Select Select

Explanation / Answer

Overstated/Understated Financial Statement Rent revenue(or revenues) Understated Income statement Net income Understated Income statement Stockholders' equity (retained earnings) Understated Balance Sheet Unearned rent (or liabilities) Overstated Balance Sheet

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