QS 3-17 Linking adjustments to financial statements LO5 For each type of adjustment in (a) through (e), indicate the effect on profit (overstated or understated) if the adjustment is not recorded. If adjustment is not recorded: Equity will be over- Liabilities will be Profit will be Assets will be stated, understated, overstated, under- or no effect Type of Adjustment overstated, under- overstated, under- stated, or no effect stated, or no effect stated, or no effect a. Prepaid Expenses b. Depreciation c. Unearned Revenues d. Accrued Expenses e. Accrued Revenues 198