The accountant for Hobson Electrical Repair failed to make an adjusting entry to record $5,000 of unpaid salaries for the last two weeks of the year.Which of the following statements is true?
A)The total revenue will be overstated.
B)The total revenue will be understated.
C)The total expenses will be overstated.
D)The total expenses will be understated.

Question

Quizplus · Accepted Answer

Since the accountant failed to make an adjusting entry to record the unpaid salaries, the total expenses for the year will be understated by $5,000. This is because salaries expense will not be recognized until the entry is made, which means that the total expenses will be less than they should have been.

The Accountant for Hobson Electrical Repair Failed to Make an Adjusting