Mattox Corporation had an unadjusted balance of $5,000 in Supplies. The actual balance was $190. The accountant failed to make the adjusting entry. What is the effect on the current year financial statements?
A) Net income is understated by $4,810.
B) Current assets are overstated by $4,810.
C) Current assets are understated by $5,000.
D) Retained Earnings is overstated by $5,000.

Question

Quizplus · Accepted Answer

The failure to adjust the Supplies account means that the current assets are overstated by the difference between the unadjusted balance and the actual balance, which is $4,810 ($5,000 - $190).

Mattox Corporation Had an Unadjusted Balance of $5,000 in Supplies