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    myaline1987's Avatar
    myaline1987 Posts: 3, Reputation: 1
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    #1

    Oct 12, 2009, 01:15 PM
    Don't have a clue
    Explain the affect of missing adjusting entries on net income.
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #2

    Oct 14, 2009, 08:04 PM

    I'm not sure why books always like to concentrate this subject on adjusting entries and overstating inventory and such things.

    ANY error that is made when doing the books will result in something being wrong on the financial statements.

    Since net income is from the income statement, then any entry involving revenue or expense is going to affect net income.

    The entire purpose of adjusting entries is to recognize certain revenues and expenses. So ALL adjusting entries involve a revenue OR expense. If you don't record one, then you don't get that revenue or expense recorded.

    If you missed recording a revenue, what would that do to net income? If you missed recording an expense, what would that do to net income?
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