The accountant for Barnes Architectural Services failed to make an adjusting entry to record $7,000 of depreciation expense.Which of the following is TRUE?
A) Total liabilities are overstated.
B) Total liabilities are understated.
C) Total assets are overstated.
D) Total assets are understated.

Question

Quizplus · Accepted Answer

Depreciation expense reduces the value of fixed assets, which are a component of total assets. Failure to record this expense would result in an overstatement of total assets.

The Accountant for Barnes Architectural Services Failed to Make an Adjusting