At the end of the fiscal year the usual adjustment for accrued salaries owed to employees was omitted.Which of the following statements is true?

Question

Quizplus · Accepted Answer

If the adjustment for accrued salaries owed to employees was omitted, it means that the company did not record the amount of salaries that were earned by employees but not yet paid out by the end of the fiscal year. This means that the amount of liabilities at the end of the year is understated because the company has a legal obligation to pay these salaries to its employees. This, in turn, affects the statement of financial position (balance sheet) as total assets and total liabilities must balance. Therefore, option B is the correct choice.

At the End of the Fiscal Year the Usual Adjustment