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

Question

Quizplus · Accepted Answer

Omitting the adjusting entry for accrued salaries results in not recording the salaries expense that has been incurred but not yet paid. This means the expenses for the year are understated because the salaries expense is lower than it should be. Consequently, net income would be overstated, liabilities would be understated (since the owed salaries are not recorded as a liability), and owner's equity would be overstated (since net income is part of owner's equity and it is overstated).

At the End of the Fiscal Year, the Usual Adjusting