Failure to record a liability will probably: Group of answer choices result in an overstated profit. result in overstated total liabilities and owner’s equity. result in overstated total assets. have no effect on profit.
Question
Failure to record a liability will probably: Group of answer choices
result in an overstated profit.
result in overstated total liabilities and owner’s equity.
result in overstated total assets.
have no effect on profit.
Solution
The failure to record a liability will probably result in an overstated profit.
Here's why:
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Liabilities are what a company owes. If a company fails to record a liability, it means that it is not accounting for an expense it has incurred.
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This unrecorded expense will not be subtracted from the company's revenues when calculating profit.
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As a result, the profit will be higher than it should be, because it
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