A company made no adjusting entry for accrued and unpaid employee salaries of $9,500 on December...

Question

Question

A company made no adjusting entry for accrued and unpaid employee salaries of $9,500 on December 31. Which of the following s

Answer 1

Answer #1

Adjusting entry for unpaid salary of $9,500 was not made on Dec 31.

It has the following effects :

i)

Expenses are understated by $9,500.

ii)

Liabilities are understated by $9,500.

iii)

Net income is overstated by $9,500.

iv)

Equity is overstated by $9,500.

Hence, Third option is the correct option.

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Answer 2

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