Failure to prepare and record an adjusting entry, at the end of a reporting period, can cause financial statements to be misleading. If the accountant does not record additional revenue earned on the last day of the reporting period (assume a new sale): Liabilities will be understated (artificially low) No answer text provided. net income will be overstated ( artificially high ) Revenues will be understated (artificially low) and assets will be understated (artificially low)