Day: March 6, 2025

If accrued revenue was omitted from a company’s financial statements, the effect on the company’s statement of profit or loss and other comprehensive income and statement of financial position would be that?

Select ONE answer:

1. The revenue, retained earnings and current liabilities will be understated
2. The revenue, retained earnings, and current assets will be understated
3. Retained earnings and non-current assets will be understated
4. Current assets will be understated and retained earnings will be overstated

Show your workings to arrive at your answer, and explain and justify your reasons:

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This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct == > Accrued revenue is revenue that, as at the reporting date, has been earned but not yet received. If it was included it would boost the revenue figure, it would therefore boost the retained earnings figure and it would boost the current assets figure (as this is where accrued revenue is recorded).
3. Not correct
4. Not correct

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