A Company Records the Fees for Legal Services Paid in Advance

Multiple Choice

A company records the fees for legal services paid in advance by its clients in an account called Unearned Legal Fees.If the company fails to make the end-of-period adjusting entry to record the portion of these fees that has been earned,one effect will be an:

A) Overstatement of equity.
B) Understatement of equity.
C) Understatement of assets.
D) Understatement of liabilities.
E) Overstatement of assets.