If the total amount that should have been debited to insurance expense is mistakenly debited to prepaid insurance,what will be the effect on the financial statements for the year?

Question

Quizplus · Accepted Answer

Debiting too much to prepaid insurance will overstate the asset and understate the expense. This will lead to an overstatement of assets and net income, which will ultimately increase stockholders' equity.

If the Total Amount That Should Have Been Debited to Insurance