The failure to properly record an adjusting entry to accrue an expense will result in an
A) understatement of expenses and an understatement of liabilities.
B) understatement of expenses and an overstatement of liabilities.
C) understatement of expenses and an overstatement of assets.
D) overstatement of expenses and an understatement of assets.

Question

Quizplus · Accepted Answer

Failing to record an adjusting entry to accrue an expense results in not recognizing the expense in the period it was incurred, leading to an understatement of expenses. Additionally, the associated liability (the obligation to pay the expense) is not recorded, resulting in an understatement of liabilities.

The Failure to Properly Record an Adjusting Entry to Accrue