Johnson Company neglected to accrue interest expense of $2,000 on its year-end trial balance. This results in an ________.
A) overstatement of net income
B) overstatement of assets
C) overstatement of liabilities
D) understatement of shareholders' equity

Question

Quizplus · Accepted Answer

Neglecting to accrue interest expense results in an overstatement of net income because the expense is not recorded, leading to higher reported profits.

Johnson Company Neglected to Accrue Interest Expense of $2,000 on Its