What may happen if necessary adjustments are overlooked?

When necessary adjustments are overlooked, there is a high likelihood of misrepresenting the financial position of the business. Adjusting entries are critical in accounting as they ensure that the financial statements accurately reflect the company's financial performance and position for a specific period. Failing to make these adjustments can lead to errors in income statements and balance sheets, ultimately providing stakeholders with misleading information regarding profits, expenses, assets, and liabilities. This misrepresentation can affect decision-making, investor confidence, and compliance with regulations.

In contrast, financial statements remaining unaffected is not possible when adjustments are needed; they inherently alter reported figures. Additionally, overlooking adjustments does not guarantee an improvement in cash flow; in fact, it may lead to significant cash management issues as obligations and revenues may not be accurately recorded. Lastly, tax obligations are typically based on accurately reported income and expenses. If adjustments are missed, it may either lead to incorrect tax calculations or consequences of underreporting or overreporting income, negating the idea that tax obligations will decrease as a result. Thus, the correct answer emphasizes the critical role of proper adjustments in maintaining honest and clear financial reporting.