Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 40 - No. 28)
If a company fails to account for accrued expenses at the end of the accounting period, the financial statements would:
Understate expenses and overstate liabilities.
Overstate expenses and understate liabilities.
Understate expenses and understate liabilities.
Overstate expenses and overstate liabilities.
Explanation
Accrued expenses represent costs incurred but not yet paid, so failing to record them would lead to an understatement of both expenses and liabilities.
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