What is the effect on the financial statements when a company fails to accrue wages expense at year-end?
A)Net income is overstated and liabilities are understated.
B)Expenses are understated and stockholders' equity is understated.
C)Expenses and liabilities are both overstated.
D)Net income is overstated and liabilities are properly reporteD.Salary expenses that are not accrued result in expenses and liabilities being under-stated.Understated expenses result in overstated net income.

Question

Quizplus · Accepted Answer

Failing to accrue wages expense at year-end will result in understated expenses and liabilities on the balance sheet. This will cause net income to be overstated and liabilities to be understated, affecting the accuracy of the financial statements.

What Is the Effect on the Financial Statements When a Company