If a Company Forgot to Prepare an Adjusting Entry to Record

question 218

True/False

If a company forgot to prepare an adjusting entry to record salaries and wages incurred but unpaid at the end of the period,Total Liabilities would be understated and Retained Earnings would be understated on the Balance Sheet.

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Definitions:

Disclosure

The act of making new or significant information known, particularly in legal and corporate contexts, where transparency is required by law or policy.

Principal

The main party to a transaction, obligation, or financial instrument, in contrast to an agent or intermediary.

Third Party

An individual or group besides the two primarily involved in a transaction or legal case.

Undisclosed Principal

A party in a contract whose identity is not revealed to the third party by the agent, allowing the principal to conduct transactions anonymously.