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At year-end a company fails to make an adjusting journal entry to record interest owed on a note payable which will be paid next year

At year-end a company fails to make an adjusting journal entry to record interest owed on a note payable which will be paid next year on the maturity date of the note. This results in which of the following? Select the single best choice.
Overstatement of stockholders' equity and understatement of liabilities
Overstatement of expense and overstatement of liabilities
Understatement of stockholders' equity and overstatement of liabilities
Overstatement of assets and understatement of liabilities

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