If a company mistakenly forgot to record depreciation on office equipment at the end of an accounting period, the financial statements prepared at that time would show:
A) Assets, net income, and equity understated.
B) Assets overstated and equity understated.
C) Assets and equity both understated.
D) Assets, net income, and equity overstated.
E) Assets overstated, net income understated, and equity overstated.

Question

Quizplus · Accepted Answer

If depreciation is not recorded, then the assets will be overstated, which will result in an overstatement of net income and equity. Therefore, the correct answer is D.

If a Company Mistakenly Forgot to Record Depreciation on Office