Which of the following are overstated as a result of the failure to record an accrued liability?
A)Net income, current ratio and rate of return on debt
B)Current ratio, acid-test ratio and rate of return on debt
C)Net income, acid-test ratio and rate of return on debt
D)Net income, current ratio and acid test ratio

Question

Quizplus · Accepted Answer

Failure to record an accrued liability means expenses are understated, leading to an overstated net income. This also results in overstated current assets relative to current liabilities, inflating both the current ratio and the acid-test ratio.

Which of the Following Are Overstated as a Result of the Failure