If the company does indeed fail to make the appropriate entry, a situation would arise where C. ​Stockholders' equity will be understated.
When salaries are accrued, they are sent to the accrued expenses account which means that they:
If instead these expenses are not accrued and are instead deducted from the net income, the net income will be lower than it should be and because net income is an equity entry, the stockholders equity will be lower than it should be.
In conclusion, the stockholders' equity will be understated if the salaries are not accrued.
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