Ms.Gardenia,the company bookkeeper,recorded the annual repair costs on the company's machinery as an increase to the Machinery account.As a result,which of the following statements correctly describes this situation?

Question

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The transaction should have been recorded as an increase to the Repairs and Maintenance Expense instead of as an increase to the Machinery account.As a result,assets are overstated and expenses are understated.That understatement of expenses causes an overstatement of net income and,as a result,an overstatement of stockholders' equity.

MsGardenia,the Company Bookkeeper,recorded the Annual Repair Costs on the Company's