Failure to record an accrued liability causes a company to:
A) overstate income.
B) overstate assets.
C) understate liabilities.
D) understate owners' equity.

Question

Quizplus · Accepted Answer

Failure to record an accrued liability means that a liability that should have been recognized has not been recorded in the financial statements. This results in an understatement of liabilities, which can lead to false assumptions about the company's financial health. For example, understating liabilities could make a company appear to be more profitable than it actually is, as it would overstate owners' equity by not recognizing the liability.

Failure to Record an Accrued Liability Causes a Company To