A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31.Which of the following statements is true?
A)It will have no effect on income.
B)It will overstate assets and liabilities by $9,000.
C)It will understate net income by $9,000.
D)It will understate assets by $9,000.
E)It will understate expenses and overstate net income by $9,000.

Question

Quizplus · Accepted Answer

Failing to record the accrued salaries results in understating expenses and overstating net income by $9,000, as the expense is not recognized in the current period.

A Company Made No Adjusting Entry for Accrued and Unpaid