A Company Made No Adjusting Entry for Accrued and Unpaid

question 54

Multiple Choice

A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31. Which of the following statements is true?

• A) It will understate assets by $9,000.
• B) It will overstate assets and liabilities by $9,000.
• C) It will understate net income by $9,000.
• D) It will have no effect on income.
• E) It will understate expenses and overstate net income by $9,000.

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Definitions:

Usurious Interest

Exorbitantly high interest rates, often exceeding legal or ethically acceptable limits.

Unconscionable

Refers to actions or terms that are excessively unjust or unreasonable, often to a degree that they violate fairness or ethics.

Supply

The sum of a product or service that can be bought at a specific price.

Land

The surface of the earth and its natural resources, considered a fundamental factor of production in economics.