Question

1. Which of the following represents an accrual? A. Accumulated depreciation B. Fees earned C. Prepaid...

1. Which of the following represents an accrual?
A. Accumulated depreciation
B. Fees earned
C. Prepaid insurance
D. Wages payable

2. If the adjustment for prepaid expenses is not recorded
A. Net income will be correctly stated
B.assets will be understated
C.net income will be overstated
D. Expenses will be overstated
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Homework Answers

Answer #1

1.

Wages payable represents an accrual.

Correct option is D.

Accrual refers to the expenses which have been incurred but not yet paid. Hence, accrued expense are liabilities.

2.

If the adjusted for prepaid expenses is not recorded, it will the following effects:

- Assets will be understated.

- Expenses will be understated.

- Net income will be overstated.

- Owners equity will be overstated.

Hence, Correct option is C.

Kindly give a positive rating if you are satisfied with this solution and please ask if you have any query.

Thanks

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