If a Company Fails to Adjust for Accrued Expenses, What

question 110

Multiple Choice

If a company fails to adjust for accrued expenses, what effect will this have on that month's financial statements?

• A)Failure to make an adjustment does not affect the financial statements.
• B)Expenses will be understated and net income and stockholders' equity will be overstated.
• C)Assets will be overstated and net income and stockholders' equity will be understated.
• D)Assets will be overstated and net income and stockholders' equity will be overstated.

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Definitions:

Direct Exporting

The process of selling goods and services from one country directly to customers in another country without using intermediaries.

Foreign Agent

An individual or organization that represents the interests of a foreign country within another nation, often required to register with the local government.

Commercial Activity

Business activities focused on the exchange of goods or services with the intent to earn profit.

Natural Resources

Raw materials and resources naturally occurring in the environment, such as minerals, forests, and water.