Failure to make an adjusting entry to recognize an accrued expense would cause an: Understatement of expense and liabilities, and overstatement of stockholders' equity. Understatement of expenses and stockholders' equity, and overstatement of liabilities. Overstatement of expenses and liabilities, and understatement of stockholders' equity. Overstatement of assets and stockholders' equity, and an understatement of expenses. None of the above.