If A Company Fails To Adjust Accrued Expenses
If a company fails to account for Accrued Expenses or Outstanding Expenses or Expenses Payab le , the n t he value of expe nses in Income Statement decreases and as a result, t he net income / net profit for the period is increased or overstated. T he effect of this non recording adjusting entry of accrued expenses is t hat the lia b ilities side decreases so total lia b ilities o n b ala nce decreased or understated. In fact, we record t h e following accrued expenses adjusting entry in t he b ooks of accou nts: Expenses a/c XXX ...