Failure to Make a Necessary Adjusting Entry for Accrued Interest

question 43

Multiple Choice

Failure to make a necessary adjusting entry for accrued interest on a note payable would result in which of the following?

• A)Liabilities and stockholders' equity would both be understated.
• B)Net income would be overstated and assets would be understated.
• C)Net income would be understated and liabilities would be understated.
• D)Net income and stockholders' equity would be overstated and liabilities would be understated.

---

Definitions:

Cell Theory

A fundamental theory in biology stating that all living things are made up of cells, that the cell is the basic unit of life, and that all cells arise from pre-existing cells.

Basic Similarities

Fundamental aspects that are common or shared between entities, enabling a comparison or understanding of their basic nature.

Small Cell Size

An attribute of cells that allows for a larger surface area relative to volume, facilitating efficient nutrient and waste product exchange.

Surface Area

The total area of the surface of a three-dimensional object.