The Accountant for Jones Auto Repair Failed to Make an Adjusting

question 11

Multiple Choice

The accountant for Jones Auto Repair failed to make an adjusting entry to record $5,000 of unpaid salaries for the last two weeks of the year.Which of the following is an effect of this omission?

• A)The net income will be overstated.
• B)The total assets will be understated.
• C)The net income will be understated.
• D)The total assets will be overstated.

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Definitions:

Real GDP

Gross Domestic Product adjusted for inflation, measuring the value of goods and services produced by a country's economy in real terms over a specific period.

Nominal GDP

The market value of all final goods and services produced within a country in a given period, measured in current prices.

Base Year

A specific year against which economic growth is measured, serving as a standard comparison for other years in index calculations and real values.

Real GDP

Gross Domestic Product adjusted for inflation, reflecting the value of all goods and services produced by an economy in a given year.