If a company failed to make the end-of-period adjustment to remove from the unearned management fees account the amount of management fees that were earned, this omission would cause an overstatement of liabilities. Hence, option C is correct.
Liabilities are owing debts or legal responsibilities to another individual or business. Liabilities, then, are future forfeitures of economic gains that an entity must make to other entities as a result of previous occurrences or previous transactions.
Some kinds of liabilities are -
Thus, option C is correct.
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The options are missing from the question-
a. an overstatement of net income.
b. an overstatement of assets.
c. an overstatement of liabilities.
d. an overstatement of equity.
e. an understatement of expenses.
