Ask Question
28 March, 12:01

The bookkeeper for Mustang Company forgot to make the end-of-the-period adjustment for the interest expense that had accrued during 2019. Which of the following is the result on Mustang's 2019 financial statements? O A Assets are overstated, and net income is understated. OB Liabilities are understated, and expenses are overstated. O C Liabilities are understated, and net income is overstated. O D Assets are overstated, and liabilities are understated

+3
Answers (1)
  1. 28 March, 12:14
    0
    C Liabilities are understated, and net income is overstated.

    Explanation:

    To accrue for interest expense, the required entries are;

    Debit Interest expense (p/l)

    Credit Accrued Interest (B/s)

    Being entries to recognize accrued interest expense.

    If this is not posted, liabilities and expenses for the period would be understated. As such, net income would be overstated.

    Hence the right answer is C Liabilities are understated, and net income is overstated.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “The bookkeeper for Mustang Company forgot to make the end-of-the-period adjustment for the interest expense that had accrued during 2019. ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers