an accountant failed to record the adjusting entry for the expired amount of a prepaid expense. how does…

an accountant failed to record the adjusting entry for the expired amount of a prepaid expense. how does this error affect the income statement?\na. the net income for the period will be overstated\nb. the liabilities at the end of the period will be overstated.\nc. the net income for the period will be understated.\nd. the liabilities at the end of the period will be understated.

an accountant failed to record the adjusting entry for the expired amount of a prepaid expense. how does this error affect the income statement?\na. the net income for the period will be overstated\nb. the liabilities at the end of the period will be overstated.\nc. the net income for the period will be understated.\nd. the liabilities at the end of the period will be understated.

Answer

Brief Explanations:

When the adjusting entry for the expired prepaid - expense is not recorded, expenses are understated. Since net income = revenues - expenses, understated expenses lead to overstated net income. Liabilities are not affected by this error related to prepaid - expense adjustment.

Answer:

A. The net income for the period will be overstated