The accountant of Hobson Electrical Repair Company 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?

Question

Quizplus · Accepted Answer

The unpaid salaries represent an expense that has been incurred in the current year but has not yet been paid. Failing to record this expense means that the total expenses will be understated, as the salaries expense was not taken into account. This will result in an overstatement of net income for the year.

The Accountant of Hobson Electrical Repair Company Failed to Make