The adjusting entry to adjust supplies was omitted at the end of the year. This would affect the income statement by having expenses

a. overstated and therefore net income understated expenses

b. understated and therefore net income understated expenses

c. understated and therefore net income overstated revenues

d. understated and therefore net income understated

This would affect the income statement by having expenses

c. understated and therefore net income overstated revenues

Explanation:

Adjusting Entry:

It is such entry which is added at the end of the fiscal period in order to make the income statement accurate.

Overstated:

In Accounting, overstated amount means that amount is greater than the true amount.

Understated:

In Accounting, if an amount is less than the true amount then it is known as understated.

As in our case, the adjusting entry for supplies was not added so in this way expenses became understated means they become less as compared to actual expenses. Therefore, revenues overstated.

c. understated and therefore net income overstated revenues

Explanation:

The p/l is a statement that shows the income and expenses of an organization.

The first element usually on the p/l is the revenue. Then is the cost of goods sold. The difference between these two is gross profit. Then the expenses are deducted while the other income are recognized to get the net income/loss.

As such, when entries to adjust supplies are omitted, an expense is omitted and is thus understated resulting in an overstatement of net income.

The right option is c. understated and therefore net income overstated revenues.