At the End of the Current Year,the Accountant for Colorful

question 42

Multiple Choice

At the end of the current year,the accountant for Colorful Graphics forgot to make an adjusting entry to accrue Wages Payable to the company's employees for the last week in December.The wages will be paid to the employees in January.Which of the following is an effect of this error?

• A)Net income is overstated.
• B)Liabilities are overstated.
• C)Net income is understated.
• D)Expenses are overstated.

---

Definitions:

Statement Of Realization And Liquidation

A financial statement prepared during the liquidation process, outlining the process of converting assets into cash and settling debts.

Unsecured Non-priority Creditor

A creditor who does not have a claim on specific collateral and ranks below secured and priority creditors for repayment in case of debtor's bankruptcy.

Accounts Receivable

Represents money owed to a business by its customers for goods or services delivered or used but not yet paid for.

Liabilities With Priority

Obligations that have preference over others for repayment, often in the context of liquidation or bankruptcy proceedings.