In 2011, a company's accountant expenses a payment that should be recorded as equipment. In 2012, which of the following is TRUE?

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In 2011, the payment was incorrectly expensed instead of being capitalized as equipment, leading to higher expenses and lower assets. In 2012, since the equipment was not capitalized, depreciation expense is understated, making total expenses understated.

In 2011, a Company's Accountant Expenses a Payment That Should