The Accountant for Jones Auto Repair Company Failed to Make

question 55

Multiple Choice

The accountant for Jones Auto Repair Company failed to make an adjusting entry to record $5,000 of unpaid salaries for the last 2 weeks of the year. Which of the following is an impact of this omission?

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

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Definitions:

Net Present Value

A financial metric used to evaluate the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows over a period of time.

Compound Interest

A method of interest calculation on a loan or deposit that involves both the initial principal and the cumulative interest from earlier periods.

Initial Investment

The initial amount of money invested in a project, property, or business to start operations.

Required Rate

The minimum return an investor expects to achieve when investing in a project or security.