Partner A invested furniture that was recorded at a value above the fair market value.This error would cause:
A)the period's net income to be overstated.
B)the period end capital to be understated.
C)the period end assets to be overstated.
D)the period end assets to be understated.

Question

Quizplus · Accepted Answer

The investment in furniture that was recorded at a value above the fair market value would cause the period end assets to be overstated. This is because the recorded value of the furniture is higher than what it is actually worth, so the asset account is inflated. This error does not affect net income or capital directly, although it may indirectly impact them if it leads to incorrect depreciation expense or amortization of the asset.

Partner a Invested Furniture That Was Recorded at a Value