As of January 31,Princess Company owes $500 to Butler Co.for equipment rented during January.If no adjustment is made for this item at January 31,how will Princess's financial statements be affected?

Question

Quizplus · Accepted Answer

If no adjustment is made for the $500 owed to Butler Co., the expenses for January will be understated by $500, which will result in an overstatement of net income for January. This will impact the accuracy of the financial statements.

As of January 31,Princess Company Owes $500 to Butler Co