A Company Made No Adjusting Entry for Accrued and Unpaid

question 181

Multiple Choice

A company made no adjusting entry for accrued and unpaid employee wages of $28,000 on December 31. This oversight would:

• A) Understate net income by $28,000.
• B) Overstate net income by $28,000.
• C) Have no effect on net income.
• D) Overstate assets by $28,000.
• E) Understate assets by $28,000.

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Definitions:

Treasury Bond

A long-term, fixed-interest U.S. government debt security with a maturity of more than ten years.

Ask Price

The lowest price a seller is willing to accept for a security.

SONIA

Sterling Overnight Index Average, an interest rate benchmark that represents the average of interest rates paid on overnight unsecured loans in the British sterling market.

LIBOR

The London Interbank Offered Rate, an interest rate average calculated from estimates submitted by the leading banks in London, used as a reference rate for lending and borrowing between banks.