If a company forgot to prepare an adjusting entry to record salaries and wages incurred but unpaid at the end of the period,Total Liabilities would be understated and Retained Earnings would be overstated on the Balance Sheet.

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If the company forgot to prepare the adjusting entry to record salaries and wages incurred but unpaid at the end of the period, the company's Total Liabilities would be understated because the unpaid amount is a liability that should be recorded. At the same time, Retained Earnings would be overstated because the company would have recognized more expenses than actually incurred, resulting in higher net income and, consequently, higher retained earnings.

If a Company Forgot to Prepare an Adjusting Entry to Record