Principles of Financial Accounting.
Principles of Financial Accounting.
24th Edition
ISBN: 9781260158601
Author: Wild
Publisher: MCG
Question
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Chapter 3, Problem 1MCQ
To determine

Identify the effect of not recording the adjusting entry.

Expert Solution & Answer
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Answer to Problem 1MCQ

Option (b) Overstate net income by $350,000 is the correct answer.

Explanation of Solution

Option (a): If the Company forgot to record the accrued and unpaid wages of $350,000 will over-state the net income. Hence, Option (a) Understate net income by $350,000 is not the correct answer.

Option (b): If the Company forgot to record the accrued and unpaid wages of $350,000 will over-state the net income. Hence, Option (b) over-state the net income by $350,000 is the correct answer.

Option (c): If the Company forgot to record the accrued and unpaid wages of $350,000 will over-state the net income. Hence, Option (c) Overstate assets by $350,000 are not the correct answer.

Option (d): If the Company forgot to record the accrued and unpaid wages of $350,000 will over-state the net income. Hence, Option (d) Understate assets by $350,000 are not the correct answer.

Conclusion

As per the above explanation, Option (b) Overstate net income by $350,000 is the correct answer.

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Chapter 3 Solutions

Principles of Financial Accounting.

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