CIMA BA3 · Chapter 9 · Question 10 of 10
A business forgets to record a closing accrual for telephone costs. What is the effect on its financial statements?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Profit is overstated and liabilities are understated
Explanation
Omitting an accrual leaves out an expense, so profit is too high, and leaves out a current liability, so liabilities are too low. Assets are unaffected.
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