An understatement of accrued wages will, if not corrected, cause income for the current and following reporting period, separately, to be overstated.

Question

Quizplus · Accepted Answer

An understatement of accrued wages will cause the current period's expenses to be understated, leading to an overstatement of income in the current period. However, in the following period, when the wages are actually paid, the expense will be recognized, correcting the overstatement of income in the previous period, but not leading to an overstatement of income in the following period.

An Understatement of Accrued Wages Will, If Not Corrected, Cause