(Answered) On april 1 2014 abc inc received an advance payment from a

Accounting

On April 1, 2014, ABC Inc. received an advance payment from a client in the amount of $315,000 that represented three years of consulting services. ABC will earn the revenue from this contract evenly over the three year period. When ABC received the advance cash payment, the entry was recorded with a credit to a nominal account, Revenue. ABC's year end is December 31. Sadly, ABC was understaffed at the time and no adjusting entries were made in 2014, 2015, or 2016. How did this error affect 2015 and 2016 financial statements (i.e. the second and third fiscal year affected...not the first fiscal year) Use O for overstated, U for Understated, and NE for no effect. Do not space between the O/U/NE and the dollar amount of the error.

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