15. Accrued salaries payable of P70,000 were not recorded at December 31, 2017.Prepaid insurance of P30,000 at December 31, 2018 were erroneously treated asexpense. Neither of these errors was discovered nor corrected. The effect ofthese two errors would causeA. 2018 profit to be understated P100,000 and December 31, 2018 retainedearnings to be understated P30,000.B. 2017 profit and December 31, 2017 retained earnings to be understatedP70,000 each.C. 2017 profit to be overstated P40,000 and 2018 profit to be understatedP30,000.D. 2018 profit and December 31, 2018 retained earnings to be understatedP30,000 each.

When accrued salary is not recorded then the profit is understated by P70,000 in the year 2017,…

15. Accrued salaries payable Prepaid insurance of P30,C expense. Neither of thes these two errors would ca A. 2018 profit to be unc earnings to be unders B. 2017 profit and Dece P70,000 each. C. 2017 profit to be ove P30,000. D. 2018 profit and Dece P30,000 each.

15. Accrued salaries payable Prepaid insurance of P30,C expense. Neither of thes these two errors would ca A. 2018 profit to be unc earnings to be unders B. 2017 profit and Dece P70,000 each. C. 2017 profit to be ove P30,000. D. 2018 profit and Dece P30,000 each.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

100%

15. Accrued salaries payable of P70,000 were not recorded at December 31, 2017.
Prepaid insurance of P30,000 at December 31, 2018 were erroneously treated as
expense. Neither of these errors was discovered nor corrected. The effect of
these two errors would cause
A. 2018 profit to be understated P100,000 and December 31, 2018 retained
earnings to be understated P30,000.
B. 2017 profit and December 31, 2017 retained earnings to be understated
P70,000 each.
C. 2017 profit to be overstated P40,000 and 2018 profit to be understated
P30,000.
D. 2018 profit and December 31, 2018 retained earnings to be understated
P30,000 each.

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