If an adjustment for expense that has been incurred but not paid was not recorded.
A)net income and assets would be understated
B)liabilities and owners' equity would be understated
C)assets and owners' equity would be overstated
D)revenues and liabilities would be overstated

Question

Quizplus · Accepted Answer

If an adjustment for an expense that has been incurred but not paid is not recorded, it means that the expense has not been recognized in the income statement, so net income will be understated. Additionally, if the expense has not been recorded, it means that there is an amount owed to a creditor that has not been recognized, and therefore, liabilities will be understated. Finally, if the expense has not been recorded, it means that the amount owed to a creditor is not reflected in the balance sheet, and therefore, assets will also be understated.

If an Adjustment for Expense That Has Been Incurred but Not