At the end of the current year, the accountant for Navistar Graphics forgot to make an adjusting entry to accrue Wages payable to the company's employees for the last week in December. The wages will be paid to the employees in January. Which of the following is one of the effects of this error?
A)Liabilities are overstated.
B)Profit is understated.
C)Expenses are overstated.
D)Profit is overstated.

Question

Quizplus · Accepted Answer

The failure to accrue wages payable results in understating expenses for the current year, which in turn overstates the profit.

At the End of the Current Year, the Accountant for Navistar