The accountant for Jones Auto Repair Company failed to make an adjusting entry to record $5,000 of unpaid salaries for the last 2 weeks of the year.Which of the following is TRUE?
A) Net income is overstated.
B) Total assets are understated.
C) Total liabilities are overstated.
D) Total assets are overstated.

Question

Quizplus · Accepted Answer

Since the unpaid salaries have not been recorded, the expense is understated and net income is overstated. It does not affect assets or liabilities.

The Accountant for Jones Auto Repair Company Failed to Make