Answer:
The correct answer is: Net Income would be overstated and Balance Sheet liabilities would be understated.
Explanation:
The Income Statement is a report that measures a company's financial performance over a specific accounting period. The Income Statement is also known as the Profit & Loss Statement and Earnings Statement. The Income Statement reflects the company's revenues and expenses during a certain period.
Thus, if deferred interest is not recorded in the Income Statement, the Expenses and Liabilities will be understated and the Net Income would be overstated.
