Question

The adjusting entry for accrued fees was omitted at the end of the current year. Indicate which items will be in error, because of the omission, on (a) the income statement for the current year and (b) the balance sheet at the end of the year. Also indicate whether the items in error will be overstated or understated

Answer 1

Asset

Liabilities_______________Overstated omitted liabilities

Equity_________________Overstated Net Income increase because omitted expenses.

Income statement________Overstated Net Income increase because omitted expenses.

Step-by-step explanation:

Db fee expenses

Cr Acrrued expenses

Understated

Asset

Liabilities_______________Overstated omitted liabilities

Equity_________________Overstated Net Income increase because omitted expenses.

Income statement________Overstated Net Income increase because omitted expenses.