Failure to accrue interest expense results in an overstatement of net income and an understatement of liabilities.

Question

Quizplus · Accepted Answer

Failure to accrue interest expense means that the company has not properly recognized and recorded the interest owed on its liabilities. This will result in an overstatement of net income as interest expense is not being accounted for, and an understatement of liabilities as the amount owed is not accurately reflected on the balance sheet.

Failure to Accrue Interest Expense Results in an Overstatement of Net