X Company received its bill from the utility company in June and paid it in July
ID: 2483695 • 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 expense in June, but instead recorded it in July when it was paid. As a result, which of the following is true regarding
1) total assets on June 30
2) total liabilities on June 30
3) net income for June
A. 1) correct; 2) understated; 3) overstated
B. 1) understated; 2) overstated; 3) correct
C. 1) overstated; 2) overstated; 3) understated
D. 1) understated; 2) understated; 3) correct
E. 1) correct; 2) correct; 3) understated
F. 1) overstated; 2) correct; 3) overstated
Explanation / Answer
The Bill is not accounted in June though it is related to June and recorded in July and Paid.
If the Bill acconted in June and paid, following is the consequence,
Total Assets reduced to the exten of bill, but because of bill not accounted, Total assets overstated
Total liabilities not effect that means no change the liabilites, and Total Liabilities Correct
Tne Net income overstated due to bill not accounted.
Therefore, the Answer is " F " that is
Total assets on June Overstated
Total Liabilities on june Correct
Net Income "Overstated"
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.