In making adjusting entries at the end of its accounting period, Chao Consulting mistakenly forgot to record: 1. $3,200 of insurance coverage that had expired (this $3,200 cost had been initially debited to the Prepaid Insurance account). 2. $2,000 of accrued salaries expense. As a result of these two oversights, the financial statements for the reporting period will [choose one]: a. Understate assets by $3,200. c. Understate net income by $2,000. b. Understate expenses by $5,200. d. Overstate liabilities by $2,000.
In making adjusting entries at the end of its accounting period, Chao Consulting mistakenly forgot to record: 1. $3,200 of insurance coverage that had expired (this $3,200 cost had been initially debited to the Prepaid Insurance account). 2. $2,000 of accrued salaries expense. As a result of these two oversights, the financial statements for the reporting period will [choose one]: a. Understate assets by $3,200. c. Understate net income by $2,000. b. Understate expenses by $5,200. d. Overstate liabilities by $2,000.
Chapter4: The Adjustment Process
Section: Chapter Questions
Problem 5EB: Reviewing insurance policies revealed that a single policy was purchased on March 1, for one years...
Related questions
Question
In making
1. $3,200 of insurance coverage that had expired (this $3,200 cost had been initially debited to the
Prepaid Insurance account).
2. $2,000 of accrued salaries expense.
As a result of these two oversights, the financial statements for the reporting period will [choose one]:
a. Understate assets by $3,200. c. Understate net income by $2,000.
b. Understate expenses by $5,200. d. Overstate liabilities by $2,000.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning