Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 33 - No. 2)
If a company does not accrue for an expense at the end of the accounting period, which of the following are true?
Liabilities are overstated and expenses are understated.
Liabilities are understated and expenses are overstated.
Liabilities are overstated and expenses are overstated.
Liabilities are understated and expenses are understated.
Explanation
If you do not record an expense, both liabilities and expenses will be understated.
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