If a company fails to accrue the appropriate wage expense at the end of the accounting period,
A)owners' equity and current assets will both be overstated
B)current liabilities and current assets will both be understated
C)net income will be overstated and current liabilities will be understated
D)current assets will be overstated and net income will be understated

Question

Quizplus · Accepted Answer

Failing to accrue the appropriate wage expense means that the expense is not recorded in the period it was incurred. This results in net income being overstated because expenses are understated, and current liabilities (wages payable) are also understated because the obligation to pay wages has not been recorded.

If a Company Fails to Accrue the Appropriate Wage Expense