Principles of Financial Accounting.
22nd Edition
ISBN: 9780077632892
Author: John J. Wild
Publisher: McGraw Hill
expand_more
expand_more
format_list_bulleted
Question
Chapter 3, Problem 1MCQ
To determine
Identify the effect of not recording the
Expert Solution & Answer
Answer to Problem 1MCQ
Option (b) Overstate net income by $350,000 is the correct answer.
Explanation of Solution
Option (a): If the Company forgot to record the accrued and unpaid wages of $350,000 will over-state the net income. Hence, Option (a) Understate net income by $350,000 is not the correct answer.
Option (b): If the Company forgot to record the accrued and unpaid wages of $350,000 will over-state the net income. Hence, Option (b) over-state the net income by $350,000 is the correct answer.
Option (c): If the Company forgot to record the accrued and unpaid wages of $350,000 will over-state the net income. Hence, Option (c) Overstate assets by $350,000 are not the correct answer.
Option (d): If the Company forgot to record the accrued and unpaid wages of $350,000 will over-state the net income. Hence, Option (d) Understate assets by $350,000 are not the correct answer.
Conclusion
As per the above explanation, Option (b) Overstate net income by $350,000 is the correct answer.
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
A company forgot to record accrued and unpaid employee wages of $350,000 at period-end. This oversight would a. Understate net income by $350,000. b. Overstate net income by $350,000. c. Have no effect on net income. d. Overstate assets by $350,000. e. Understate assets by $350,000.
A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31. Which of the following statements is true?
a.
It will have no effect on income.
b.
It will understate expenses and overstate net income by $9,000.
c.
It will overstate assets and liabilities by $9,000.
d.
It will understate net income by $9,000.
Records showed that as of December 31, 2020, accrued salaries payable of P21,000 were not recorded in Company’s books. In addition, office supplies on hand of P9,000 at December 31, 2020 were erroneously treated as expense instead of supplies inventory. Neither of these errors was discovered nor corrected.
What is the effect of these two errors?
A. 2020 net income and December 31, 2020 accumulated profits are understated by P9,000 each.
B. 2019 net income is overstated by P12,000 and 2020 net income is understated by P9,000
C. 2019 net income and December 31, 2019 accumulated profits are understated by P21,000 each.
D. 2020 net income is understated by P30,000 and January 1, 2021 accumulated profits is understated by P9,000
Chapter 3 Solutions
Principles of Financial Accounting.
Ch. 3 - Prob. 1MCQCh. 3 - Prob. 2MCQCh. 3 - Prob. 3MCQCh. 3 - Prob. 4MCQCh. 3 - Prob. 5MCQCh. 3 - What is the difference between the cash basis and...Ch. 3 - Prob. 2DQCh. 3 - What type of business is most likely to select a...Ch. 3 - What is a prepaid expense and where is it reported...Ch. 3 - What type of assets requires adjusting entries to...
Ch. 3 - What contra account is used when recording and...Ch. 3 - Prob. 8DQCh. 3 - If a company initially records prepaid expenses...Ch. 3 - Prob. 10DQCh. 3 - Prob. 11DQCh. 3 - Samsung Assume Samsung has unearned revenue. What...Ch. 3 - Prob. 12DQCh. 3 - Prob. 1QSCh. 3 - Prob. 2QSCh. 3 - Identifying accounting adjustments Classify the...Ch. 3 - Prob. 4QSCh. 3 - Prepaid (deferred) expenses adjustments For each...Ch. 3 - Prob. 6QSCh. 3 - Prob. 7QSCh. 3 - Prob. 8QSCh. 3 - Prob. 9QSCh. 3 - Prob. 10QSCh. 3 - Prob. 11QSCh. 3 - Accrued expenses adjustments For each separate...Ch. 3 - Prob. 13QSCh. 3 - Accrued revenues adjustments For each separate...Ch. 3 - Prob. 15QSCh. 3 - Prob. 16QSCh. 3 - Prob. 17QSCh. 3 - Prob. 18QSCh. 3 - Prob. 19QSCh. 3 - Prob. 20QSCh. 3 - Prob. 1ECh. 3 - Classifying adjusting entries P1 P2 P3 P4 In the...Ch. 3 - Prob. 3ECh. 3 - Question: Determining cost flows through accounts...Ch. 3 - Prob. 5ECh. 3 - Prob. 6ECh. 3 - Prob. 7ECh. 3 - Analyzing and preparing adjusting entries P5...Ch. 3 - Prob. 9ECh. 3 - Prob. 10ECh. 3 - Prob. 11ECh. 3 - Prob. 12ECh. 3 - Prob. 1APCh. 3 - Prob. 2APCh. 3 - Prob. 3APCh. 3 - Prob. 4APCh. 3 - Prob. 5APCh. 3 - Prob. 6APCh. 3 - Prob. 1BPCh. 3 - Prob. 2BPCh. 3 - Prob. 3BPCh. 3 - Prob. 4BPCh. 3 - Prob. 5BPCh. 3 - Prob. 6BPCh. 3 - Prob. 3SPCh. 3 - Prob. 1BTNCh. 3 - Prob. 2BTNCh. 3 - Prob. 5BTNCh. 3 - Prob. 7BTNCh. 3 - Prob. 9BTN
Knowledge Booster
Similar questions
- These errors were discovered in the account of Golden Arches Company: Salaries payable amounting to P 34,000 was not recorded in 2021. Accrued vacation pay for the year 2021 for P 62,500 was not recorded due to lack of knowledge by the bookkeeper. Insurance for a 12-month period purchased on November 1, 2021 was charged to expenses in the amount of P 37,200. a. P 6,200 under b. P 65,500 over c. P 59,300 over d. P 64,500 underarrow_forwardThese errors were discovered in the account of Golden Arches Company: Salaries payable amounting to P 34,000 was not recorded in 2021. Accrued vacation pay for the year 2021 for P 62,500 was not recorded due to lack of knowledge by the bookkeeper. Insurance for a 12-month period purchased on November 1, 2021 was charged to expenses in the amount of P 37,200. P 64,500 under P 6,200 under P 65,500 over P 59,300 overarrow_forwardidentify whether it is treated as a prior period adjustment or change in accounting estimate. Upon reviewing customer contracts, the company realizes it mistakenly reported $150,000 in revenue instead of the actual amount earned of $15,000. This mistake occurred two years ago and had a material effect on financial statements.arrow_forward
- Multiple Choice Quiz: A company forgot to record accrued and unpaid employee wages of $350,000 at period-end. This oversight would, a. Understate net income by $350,000. b. Overstate net income by $350,000. c. Have no effect on net income. d. Overstate assets by $350,000. e. Understate assets by $350,000.arrow_forwardIDENTIFY THE EFFECT OF THE FOLLOWING TRANSACTION TO THE RISK OF MATERIAL MISSTATEMENT TO FINANCIAL STATEMENTS. The employees of the company are being paid on a weekly basis. Does it have a: A. INCREASE effect B. DECREASE effect C. NO EFFECT effectarrow_forwardDuke Company hired a new accountant late in December 2020 who made several errors when closing the books. Accrued salaries payable of $102,000 were not recorded at December 31, 2020. Office supplies on hand of $58,000 at December 31, 2021 were erroneously treated as expense instead of supplies inventory. Neither of these errors was discovered nor corrected before the financial statements were issued. The effect of these two errors would cause Question 3Select one: 2020 net income and December 31, 2020 retained earnings to be understated $102,000 each. 2020 net income to be overstated $44,000 and 2021 net income to be understated $58,000. 2021 net income to be understated $160,000 and December 31, 2021 retained earnings to be understated $58,000. 2021 net income and December 31, 2021 retained earnings to be understated $58,000 each.arrow_forward
- Clock Company showed the following errors in their account during December 31, 2021: Dividends of P 100,000 had been declared but was not recorded on December 10, 2021. Buildings and equipment maintenance for P 480,000 had been debited to expense at the end of April 2020. It had an estimated life of 8 years. The company failed to record sales commissions payable amounting to P 10,500 and P 19,000 at the end of 2020 and 2021, respectively. Supplies on hand amounting to P 6,000 and P 15,000 were not recognized at the end of 2020 and 2021, respectively. What is the net effect of the error in the 2021 net income? a.P 59,500 over b.P 72,200 under c.P 75,000 over d.P 70,000 overarrow_forwardBelow are three independent and unrelated errors. On December 31, 2020, Wolfe-Bache Corporation failed to accrue salaries expense of $1,400. In January 2021, when it paid employees for the December 27–January 2 workweek, Wolfe-Bache made the following entry: Salaries expense 1,400 Cash 1,400 On the last day of 2020, Midwest Importers received a $82,000 prepayment from a tenant for 2021 rent of a building. Midwest recorded the receipt as rent revenue. The error was discovered midway through 2021. At the end of 2020, Dinkins-Lowery Corporation failed to accrue interest of $7,200 on a note receivable. At the beginning of 2021, when the company received the cash, it was recorded as interest revenue. Required:For each error:1. What would be the effect of each error on the income statement and the balance sheet in the 2020 financial statements?2. Prepare any journal entries each company should record in 2021 to correct the errors.arrow_forwardc. Assuming you have checked this account and have detected that client did not record an expense transaction of $60,000 for the accrued salary incurred in June 2020. The client also did not calculate and record the accrued annual leave expenses for the 2020 financial year at the amount of $30,000 - What management assertions are violated (i.e. at risk) - What would you do in relation to the personnel expenses account if you have determined that the issues detected all are errors (an unintentional mistake).arrow_forward
- The accountant forgot to record the accrual of salary and wages expense for the last few days of the month. What is the effect on the financial statements due to this omission? Address both financial statements and which account(s) may be misstated.arrow_forwardDana Co.'s officers' compensation expense account had a balance of $224,000 at December 31, 20X4 before any appropriate year-end adjustment relating to the following:No salary accrual was made for December 30-31, 20X4. Salaries for the two-day period totaled $3,500.20X4 officers' bonuses of $62,500 were paid on January 31, 20X5.In its 20X4 income statement, what amount should Dana report as officers' compensation expense? $224,000 $290,000 $227,500 $286,500arrow_forwardif mistakenly omitted adjusting entries for (a) unearned revenue earned during the year ($34,900) and (b) accrued wages ($12,770). What is the effect of each error, considered individually, on the income statement for the current year ended July 31.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education