During the adjusting process two transactions were neglected or omitted. The first is for unearned rent revenue of which $415 was earned during the period, the second was for accrued interest payable of which $275 is owed for the period. As a result of these omissions
A) expenses are understated by $275.
B) These omissions would not affect the financial statements; the financial statements will be correct.
C) revenue is overstated by $690.
D) net income is overstated by $140.
E) liabilities are overstated by $690.
Answer: A) expenses are understated by $275.
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