If a company forgets to record the journal entry to accrue interest expense,then its net income is too ________ and its liabilities are too ________.
A)high;high
B)low;high
C)low;low
D)high;low

Question

Quizplus · Accepted Answer

The entry to accrue interest on a note increases Interest Payable,a liability,and increases Interest Expense,an expense.If that entry is not made,liabilities are understated (too low)and expenses are also understated (too low)and,as a result,net income is overstated (too high).

If a Company Forgets to Record the Journal Entry to Accrue