Without an adjusting entry for accrued interest expense, liabilities and interest expense are understated, and net income and stockholders' equity are overstated.

Question

Quizplus · Accepted Answer

Accrued interest expense represents a liability that has been incurred but not yet paid, so without adjusting entries, liabilities and expenses are understated, leading to overstated net income and stockholders' equity.

Without an Adjusting Entry for Accrued Interest Expense, Liabilities and Interest