Baileys received its electric bill for December on December 31, but did not pay

Question

Baileys received its electric bill for December on December 31, but did not pay nor record it in the general journal This resulted in A understated assets B overstated net income C overstated liabilities D understated capital Baileys received its electric bill for December on December 31, but did not pay nor record it in the general journal This resulted in A understated assets B overstated net income C overstated liabilities D understated capital A understated assets B overstated net income C overstated liabilities D understated capital

Explanation / Answer

b. overstated net income

If the value of ending inventory is overstated, that means the cost of goods sold, is understated and net income is overstated. The opposite effect occurs for errors in the beginning balance of inventory; overstating beginning inventory means the cost of goods sold is overstated and net income is understated

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