On January 1,Needem,Inc

question 49

Multiple Choice

On January 1,Needem,Inc.borrows $10,000 and agrees to repay the loan plus 8% interest in two years.If the proper adjustment is not made at the end of the first year,what will be wrong with the financial statements?

• A)Nothing will be wrong with the financial statements.
• B)Cash will be overstated on the balance sheet.
• C)Expenses will be overstated on the income statement.
• D)Liabilities will be understated on the balance sheet.

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