Question

1. a company recorded the $48,000 adjusting entry for accrued interest expense on monies it borrowed by debiting liabilities and crediting revenue for $48,000. which of the following is overstated by $96,000? a. assets b. expenses cc. net income d. all of these e. none of these

Answer 1

The company's assets, expenses, and net income are all overstated by $96,000. Therefore, the correct option is d. all of these

Step-by-step explanation:

The correct answer is d. all of these. The statement in the question indicates that the company recorded the $48,000 adjusting entry for accrued interest expense by debiting liabilities and crediting revenue.

However, this entry is incorrect because accrued interest expense is an expense and should be debited to expenses and credited to liabilities. By incorrectly debiting liabilities and crediting revenue, both assets and expenses are overstated by $48,000 each, resulting in an overall overstatement of $96,000.