The adjusting entry to adjust supplies was omitted at the end of the year. This would effect the income statement by having
A) expenses understated and therefore net income overstated
B) revenues understated and therefore net income understated
C) expenses understated and therefore net income understated
D) expenses overstated and therefore net income understated

Question

Quizplus · Accepted Answer

If the adjusting entry for supplies is omitted, expenses will be understated because the cost of supplies used is not recorded. This results in net income being overstated.

The Adjusting Entry to Adjust Supplies Was Omitted at the End