Question

In making adjusting entries at the end of its accounting period, Chao Consulting mistakenly forgot to record: $4,100 of insurance coverage that had expired (this $4,100 cost had been initially debited to the Prepaid Insurance account). 2,450 of accrued salaries expense. As a result of these two oversights, the financial statements for the reporting period will:

Answer 1

Answer and Explanation:

In case when the initially $4,100 would be debited to the prepaid insurance account and there is $2,450 of accrued salaries expense

So, the financial statement for the same would be

= $4,100 + $2,450

= $6,550

The same amount i.e. $6,550 would be understated

In that case if these are not adjusted so the same would be understated