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17 July, 15:17

A company made no adjusting entry for accrued and unpaid employee wages of $28,000 on December 31. This oversight would: A. Understate net income by $28,000. B. Overstate net income by $28,000. C. Have no effect on net income. D. Overstate assets by $28,000. E. Understate assets by $28,000.

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  1. 17 July, 16:04
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    B. Overstate net income by $28,000

    Explanation:

    Provided that

    Unpaid employee wages = $28,000

    Since no adjusting entry is made

    So, it would overstate the net income and the expenses account too for $28,000 as no adjusting entry is passed that reduced the expenses account

    Therefore, it will give impact two accounts i. e net income and the expense account. Both the accounts are overstated for $24,000
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