If an Adjustment for Accrued Income Is Omitted from the Financial

question 12

Multiple Choice

If an adjustment for accrued income is omitted from the financial reports the effect is:

• A) assets are understated; profit is understated.
• B) assets are overstated; profit is understated.
• C) assets are understated; profit is overstated.
• D) assets are overstated; profit is overstated.

---

Definitions:

Direct Labor

The wages and related expenses for workers who are directly involved in the production of goods or services.

Raw Material

Basic materials used in the manufacturing process to produce finished goods.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including both materials and labor costs.

Raw Material

Basic materials or substances used in the manufacturing or production process to create goods and products.