At the end of the current year,the accountant for Colorful Graphics,Inc.forgot to make an adjusting entry to accrue Wages Payable to the company's employees for the last week in December.The wages will be paid to the employees in January.Which of the following is an effect of this error?
A)Net income is overstated.
B)Liabilities are overstated.
C)Net income is understated.
D)Expenses are overstated.

Question

Quizplus · Accepted Answer

Failing to accrue wages payable results in understating expenses, which leads to overstating net income.

At the End of the Current Year,the Accountant for Colorful