PRC-1 · Chapter 4 · Question 81 of 100
If an accountant completely omits the year-end adjusting entry for an accrued expense, what is the specific effect on the statement of financial position?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Liabilities will be understated.
Explanation
An accrued expense creates a current liability. Failing to record it means the total liabilities reported on the balance sheet will be lower than they actually are.
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