If the total amount for Insurance Expense is inadvertently posted to Prepaid Insurance at the end of the year, what will be the effect on the year-end financial statements?

Name: If the total amount for Insurance Expense is inadvertently posted to Prepaid Insurance at the end of the year, what will be the effect on the year-end financial statements?
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Question

Quizplus · Accepted Answer

If Insurance Expense is posted to Prepaid Insurance, expenses are understated, leading to overstated net income and thus overstated owner's equity.

If the Total Amount for Insurance Expense Is Inadvertently Posted