A company replaced tires on a vehicle and debited the amount to Vehicle instead of Repairs and Maintenance Expense. Which of the following would occur because of this error?
A)Expenses would be understated.
B)Net income would be understated.
C)Retained Earnings would be understated.
D)Assets would be understated.

Question

Quizplus · Accepted Answer

By debiting the amount to Vehicle (an asset account) instead of Repairs and Maintenance Expense, expenses are understated, leading to an overstatement of net income and assets.

A Company Replaced Tires on a Vehicle and Debited the Amount