A Company Made No Adjusting Entry for Accrued and Unpaid

question 137

Multiple Choice

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.

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Definitions:

Increases

The act or process of becoming larger or greater in size, number, value, or amount.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, usually paying fixed dividends.

Common Stock

Equity security representing ownership interest in a corporation, with holders entitled to vote at company meetings and receive dividends.

Distribution

The process of delivering products or services from the production or service delivery point to the end consumer.