The accountant for Barnes Auto Repair Company failed to make an adjusting entry to record $5,000 of unpaid salaries for the last two weeks of the year.Which of the following is an effect of this omission?
A) The net income will be overstated.
B) The total assets will be understated.
C) The net income will be understated.
D) The total assets will be overstated.

Question

Quizplus · Accepted Answer

The omission of the adjusting entry for unpaid salaries means that expenses are understated, leading to an overstatement of net income.

The Accountant for Barnes Auto Repair Company Failed to Make