Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 27 - No. 42)
If a company fails to make an adjusting entry for accrued interest expense at the end of the year, what will be the impact on the financial statements?
Assets and liabilities will be understated.
Expenses and liabilities will be understated.
Assets and equity will be overstated.
Revenue and assets will be overstated.
Explanation
Failure to record accrued interest expense means both expenses and liabilities are understated.
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