The Failure to Properly Record an Adjusting Entry to Accrue

question 102

Multiple Choice

The failure to properly record an adjusting entry to accrue an expense will result in an

• A) understatement of expenses and an understatement of liabilities.
• B) understatement of expenses and an overstatement of liabilities.
• C) understatement of expenses and an overstatement of assets.
• D) overstatement of expenses and an understatement of assets.

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Definitions:

Spot Rates

The existing selling or buying price of a certain asset that is ready for instant delivery.

IFRS 9

International Financial Reporting Standard 9, dictating the accounting for financial instruments, including recognition, measurement, and impairment of assets.

Accounts Receivable

Money owed to a business by its clients or customers for goods or services delivered or used but not yet paid for.

Hedge

An investment made to reduce the risk of adverse price movements in an asset, typically involving taking an offsetting position in a related security.