What Is the Effect on the Financial Statements When a Company

question 59

Multiple Choice

What is the effect on the financial statements when a company fails to accrue wages expense at year-end?

• A)Net income is overstated and liabilities are understated.
• B)Expenses are understated and stockholders' equity is understated.
• C)Expenses and liabilities are both overstated.
• D)Net income is overstated and liabilities are properly reporteD.Salary expenses that are not accrued result in expenses and liabilities being under-stated.Understated expenses result in overstated net income.

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Definitions:

Milgram Experiment

A psychological experiment conducted by Stanley Milgram in the 1960s to study obedience to authority, where participants were instructed to administer electric shocks to another person.

Stanford University Prison Experiment

A psychological study conducted by Philip Zimbardo in 1971 at Stanford University, where students were assigned roles of prisoners and guards to explore the effects of perceived power.

Generalization

Drawing a conclusion about a certain characteristic of a population based on a sample from it.

Logical Support

The provision of reasons or evidence to justify a claim or argument.