If a company failed to record depreciation expense on equipment for a period,the financial statements would show total assets overstated and total stockholders' equity understated on the balance sheet.

Question

Quizplus · Accepted Answer

If depreciation expense is not recorded, total assets would be overstated, but total stockholders' equity would also be overstated, not understated, because expenses reduce net income and retained earnings.

If a Company Failed to Record Depreciation Expense on Equipment