Failure to Make a Necessary Adjusting Entry for Accrued Interest

Multiple Choice

Failure to make a necessary adjusting entry for accrued interest on a note payable would result in which of the following?

A) An understatement of both liabilities and stockholders' equity.
B) Net income to be overstated and assets to be understated.
C) Net income to be understated and liabilities to be understated.
D) An overstatement of net income, an understatement of liabilities, and an overstatement of stockholders' equity.