Failure to Record an Accrued Liability for Wages Earned by Employees

question 14

Multiple Choice

Failure to record an accrued liability for wages earned by employees causes a company to:

• A)understate net income.
• B)overstate assets.
• C)overstate liabilities.
• D)overstate stockholders' equity.

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Definitions:

Efficient Market

A financial market theory stating prices fully reflect all available information, making it impossible to consistently achieve higher returns.

Concentrating Investment

Allocating a significant portion of an investment portfolio to a single investment or a small group of investments, increasing potential risk and return.

Systematic Risk Principle

The concept that the overall market or economy has inherent risks that affect all investments to some degree, and these risks cannot be eliminated through diversification.

Variance

A measure of the dispersion or spread of a set of data points or investment returns, reflecting how much the data points differ from the mean.