An accountant who forgets about depreciation charges for the year in drawing up the profit and loss statement and balance sheet will:
A)overstate the profits for the year.
B)understate the profits for the year.
C)overstate the liabilities of the firm.
D)understate the liabilities of the firm.
E)understate the net worth of the firm.

Question

Quizplus · Accepted Answer

Depreciation is an expense that reduces the profit. Forgetting to include it will result in overstating the profits.

An Accountant Who Forgets About Depreciation Charges for the Year