he failure to record an accrual adjustment relating to salar

he failure to record an accrual adjustment relating to salaries and wages would not affect the: O balance sheet income statement O statement of retained earnings O statement of cash flows

Solution

Excluded accrual adjustment entry will increase a liability account which is understated on balance sheet.

It also increases an expense account resulting in understated income statement. Hence net income will be overstated in the income statement.

Cash flow represents change in cash and cash equivalent in a business. For accrual revenue and accrual expenses, neither cash nor cash equivalents have exchanged on hands, so no cash flow is created. Thus eliminated accrued adjustment entry relating to salaries and wages do not have any influence on cash flow.

Hence option “Statement of cash flows” is correct answer.