Question

While preparing the final accounts for the year ended 31 March 2022, the accountant of ABC Ltd forgot to pass an adjustment entry for unpaid salaries for the month of March 2022 amounting to ₹12,000. Which of the following statements explains the effect of this error?

A Salaries for the year will be understated by ₹12,000 and current assets, as on 31 March 2022, will be overstated by ₹12,000.
B Current liabilities as on 31 March 2022 will be overstated by ₹12,000.
C Salaries for the year will be understated by ₹12,000 and current liabilities, as on 31 March 2022, will be understated by ₹12,000.
D Salaries for the year will be overstated by ₹12,000.
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