If an adjusting entry is not made for an accrued expense,
A) expenses will be overstated.
B) liabilities will be understated.
C) net income will be understated.
D) equity will be understated.

Question

Quizplus · Accepted Answer

If an adjusting entry is not made for an accrued expense, the liability will be understated because the expense was incurred but not yet paid. This will affect the balance sheet because the liability should be recognized as of the end of the accounting period. It will not directly affect the income statement or equity.

If an Adjusting Entry Is Not Made for an Accrued