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The accountant for the Linville Company forgot to make an adjusting entry to record revenue earned but not yet billed to customers. The effect of this error is:
1. An overstatement of assets and of net income offset by an understatement of stockholders' equity.
2. An overstatement of net income and an understatement of assets.
3. An understatement of assets, net income, and stockholders' equity.
4. An overstatement of liabilities offset by an understatement of stockholders' equity.

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Solution Summary

The accountant for the Linville Company forgot to make an adjusting entry to record revenue earned but not yet billed to customers. The effect of this error is:
1. An overstatement of assets and of net income offset by an understatement of stockholders' equity.
2. An overstatement of net income and an understatement of assets.
3. An understatement of assets, net income, and stockholders' equity.
4. An overstatement of liabilities offset by an understatement of stockholders' equity.

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The accountant for the Linville Company forgot to make an adjusting entry to record revenue earned but not yet billed to customers. The effect of this error is: ...

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