Ms.Gardenia,the bookkeeper,made a mistake and recorded depreciation expense for the year twice.This error will cause:
A)assets to be overstated.
B)liabilities to be understated.
C)stockholders' equity to be understated.
D)stockholders' equity to be overstated.

Question

Quizplus · Accepted Answer

Depreciation is recorded with a debit to Depreciation Expense (to increase that expense account)and a credit to Accumulated Depreciation (to increase that contra-asset account).If the entry is recorded twice,total assets will be understated and expenses will be overstated.The overstatement of expenses will cause net income to be understated and,as a result,stockholders' equity will also be understated.

MsGardenia,the Bookkeeper,made a Mistake and Recorded Depreciation Expense for the Year