X Company received its bill from the utility company in June and paid it in July
ID: 2483100 • Letter: X
Question
X Company received its bill from the utility company in June and paid it in July. Its accountant failed to record the utility expenses in June, but instead recorded it in July when it was paid. As a result, Which of the following is true regarding. total assets on June 30 total liabilities on June 30 net income for June understated; 2) overstated; 3) correct 1) overstated; 2) correct; 3) overstated f correct; 2) correct; 3) understated correct; 2) understated; 3) overstated understated; 2) understated; 3) correct overstated; 2) overstated; 3) understatedExplanation / Answer
1) Total assets as on June 30 is correct as the bill was actually paid in July.
2) Total liabilities as on June 30 is understated as the bill is not recorded in June and bills payable account is understated by this bill amount.
3) Net income for June is overstated as the Bill expense is not being considered.
Hence, Answer is D. 1) Correct; 2) Understated; 3) Overstated
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