The accounting for Sam Consulting Company failed to adjust the unearned revenue account for $3,000 of revenue that has now been earned. This means that it's liabilities are ______ for the period.

Answer 1

If Sam Consulting Company failed to adjust the unearned revenue account for $3,000 of revenue that has now been earned, it means that its liabilities are overstated for the period.

This is because unearned revenue is recorded as a liability until the revenue is earned, so by not making the necessary adjustment, the company continues to report $3,000 as a liability that should have been recognized as revenue, thus inflating its liabilities.