Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 43 - No. 25)
If a company fails to record accrued salaries, how will this affect its financial statements?
Assets and liabilities will be overstated.
Assets and equity will be understated.
Net income will be overstated and liabilities will be understated.
Net income will be understated and liabilities will be overstated.
Explanation
Failing to record accrued salaries overstates net income (by not recognizing the expense) and understates the liabilities.
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