BONUS POINT QUESTIONS #18 & #19 (3 pts, each): Which of the following would be a

Question

BONUS POINT QUESTIONS #18 & #19 (3 pts, each): Which of the following would be an effect of a company's failure to record the adjusting entry ypically required to record wages earned by the company's employees but unpaid to them at the end of the year? (Hint: Write the adjusting entry to determine the answer!) The company's liabilities would be understated The company's assets would be understated The company's net income would be understated The company's shareholders' equity would be understated . .s tainl halance totals

Explanation / Answer

Answer

Accounts title

Debit

Credit

Wages expenses

$                                     XXX

   Wages payable

$                     XXX

Credit of Liability account means Increase in Liability.

‘point A’: expense will be understated, which means Net Income will be over stated and hence Shareholder’s Equity would be Overstated.

‘point B’: Liabilities will be understated because Wages Payable that was recorded in above entry will be omitted to be recorded.

Accounts title

Debit

Credit

Wages expenses

$                                     XXX

   Wages payable

$                     XXX

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