At the end of the current year, the accountant for Computer Graphics, Inc. forgot to make an adjusting entry to accrue Wages Payable for 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 an effect of this error?
A) Net income is overstated.
B) Liabilities are overstated.
C) Net income is understated.
D) Expenses are overstated.

Question

Quizplus · Accepted Answer

By not accruing wages payable, the company fails to recognize an expense that was incurred in the current year, leading to an overstatement of net income. Liabilities are understated because the wages payable are not recorded, and expenses are understated, not overstated.

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