A new accountant working for Metcalf Ltd records $800 Depreciation expense on store equipment by debiting Depreciation expense $800 and crediting Cash $800. The effect of this entry is to:
A) adjust the accounts to their proper amounts on 31 December.
B) understate total assets on the statement of financial position as of 31 December.
C) overstate the carrying amount of the depreciable assets at 31 December.
D) understate the carrying amount of the depreciable assets as of 31 December.

Question

Quizplus · Accepted Answer

The adjusting entry to record depreciation expense requires a credit entry to the Accumulated depreciation account. One effect of this error is to overstate the carrying amount of the depreciable asset.

A New Accountant Working for Metcalf Ltd Records $800 Depreciation