At January 31, the End of the First Month of the Year

question 119

Essay

At January 31, the end of the first month of the year, the usual adjusting entry transferring expired insurance to an expense account is omitted. Which items will be incorrectly stated, because of the error, on
(a) the income statement for January and
(b) the balance sheet as of January 31? Also indicate whether the items in error will be overstated or understated.

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Definitions:

FASB Technical Bulletins

Short for Financial Accounting Standards Board Technical Bulletins, these documents provide guidance on specific accounting issues.

Authoritative Support

Documentation or guidance that provides the basis for accounting policies and decisions, often issued by standard-setting bodies.

Technical Bulletins

Official communications issued to provide instructions, information, or updates on technical aspects of products or services.

FASB

The Financial Accounting Standards Board, an organization that establishes financial accounting and reporting standards within the United States.