On December 31, 2012, the adjusting entry for depreciation was made incorrectly. The following is the entry which was made erroneously: The correct amount of depreciation should have been $5,100. Consider the effects of this error on the balance sheet, and identify which of the following statements is TRUE.

Question

On December 31, 2012, the adjusting entry for depreciation was made incorrectly. The following is the entry which was made erroneously:  The correct amount of depreciation should have been $5,100. Consider the effects of this error on the balance sheet, and identify which of the following statements is TRUE.

Quizplus · Accepted Answer

The error was an overstatement of $3,600 of depreciation expense. This means that assets were overstated by $3,600 ($5,100 of depreciation expense was not recorded, so the related assets were not reduced by that amount), and therefore total assets were overstated by $3,600.

On December 31, 2012, the Adjusting Entry for Depreciation Was