Which one of the following errors causes an overstatement of net income?

Question

Quizplus · Accepted Answer

Failure to record depreciation expense results in an overstatement of net income because expenses are understated, leading to an artificially higher income figure. Depreciation expense reduces the value of assets over time and also reduces reported net income, reflecting the cost of using the asset. Not recording it means not accounting for the cost of asset use, thus overstating income.

Which One of the Following Errors Causes an Overstatement of Net