Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 12 - No. 28)
What is the impact of not recording an adjusting entry for accrued interest expense?
Liabilities are overstated, and expenses are understated.
Liabilities are understated, and expenses are overstated.
Liabilities are understated, and expenses are understated.
Assets are overstated, and expenses are understated.
Explanation
Not recording accrued interest will lead to understated liabilities and understated expenses, since expenses are charged against equity.
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