The accountant of Residential Architectural Services failed to make an adjusting entry to record $7,000 of depreciation expense. Which of the following statements is true?
A) The total liabilities will be overstated.
B) The equity will be understated.
C) The total assets will be overstated.
D) The total assets will be understated.

Question

Quizplus · Accepted Answer

Failing to record depreciation expense results in not reducing the book value of the asset by the depreciation amount. Consequently, the total assets reported on the balance sheet will be higher than they should be, making choice C correct.

The Accountant of Residential Architectural Services Failed to Make an Adjusting