If an accountant forgot to record depreciation on office equipment at the end of an accounting period, what is the effect on the statements prepared at that time?
A)Assets are overstated and equity is understated.
B)Assets are overstated, profit is understated, and equity is overstated.
C)Assets, profit, and equity are overstated.
D)Assets, profit, and equity are understated.
E)Assets and equity are both understated.

Question

Quizplus · Accepted Answer

Depreciation reduces the value of assets and is an expense that reduces profit and equity. Not recording it means assets, profit, and equity are overstated.

If an Accountant Forgot to Record Depreciation on Office Equipment