Fred Barnes prepares adjusting entries for Popsico Industries. In entry #7, Fred accrued interest expense on the company's note payable. Due to his clumsy fingers, Fred calculated interest based on a 265 day year rather than a 365 day year.

Which of the following would result?

Multiple Choice

• Net income would be overstated.

• None of the above.

• Cash would be understated.

• Cash will be overstated.

• Liabilities would be overstated.