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Effect of Omitting Adjusting Entry Accrued salaries owed to employees for October 30 and 31 are not considered in preparing the financial statements for the year ended October 31. Indicate which items will be erroneously stated, because of the error, on (A) the income statement for the year and (B) the balance sheet as of October 31. Also indicate whether the items in error will be overstated or understated. a.   Income Statement Salaries Expense   Net Income   b.   Balance Sheet Salaries Payable   Stockholders' Equity

Effect of Omitting Adjusting Entry Accrued salaries owed to employees for October 30 and 31 are not considered in preparing the financial statements for the year ended October 31. Indicate which items will be erroneously stated, because of the error, on (A) the income statement for the year and (B) the balance sheet as of October 31. Also indicate whether the items in error will be overstated or understated. a.   Income Statement Salaries Expense   Net Income   b.   Balance Sheet Salaries Payable   Stockholders' Equity

FINANCIAL ACCOUNTING
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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Effect of Omitting Adjusting Entry

Accrued salaries owed to employees for October 30 and 31 are not considered in preparing the financial statements for the year ended October 31. Indicate which items will be erroneously stated, because of the error, on (A) the income statement for the year and (B) the balance sheet as of October 31. Also indicate whether the items in error will be overstated or understated.

a.   Income Statement

Salaries Expense  
Net Income  

b.   Balance Sheet

Salaries Payable  
Stockholders' Equity  
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