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 an impact of this omission?
A)The net income will be overstated.
B)The total assets will be understated.
C)The total liabilities will be overstated.
D)The total assets will be overstated.

Question

Quizplus · Accepted Answer

Since the accountant failed to record the unpaid salaries, the net income will be overstated because salaries expenses were not recognized. This means that the company's expenses will be lower than they should be, resulting in a higher net income.

The Accountant for Jones Auto Repair Company Failed to Make