Southern Company's accountant failed to accrue as of 12/31/13 some employee fringe benefit program expenses that were incurred in 2013 and that will be paid in 2014. The result of this omission is to:

Question

Quizplus · Accepted Answer

The omission of accruing expenses results in an understatement of liabilities, which overstates the current ratio. It also overstates net income, leading to an overstatement of ROI and ROE.

Southern Company's Accountant Failed to Accrue as of 12/31/13 Some