The accountant for Diamond Jewelry Repair Services, Inc. forgot to make an adjusting entry for Depreciation Expense for the current year. Which of the following is an effect of this error?

Question

Quizplus · Accepted Answer

Failing to record depreciation expense results in not reducing the book value of the asset for its usage during the period. This oversight leads to not recognizing the expense that should reduce net income. Therefore, net income is overstated because expenses are understated.

The Accountant for Diamond Jewelry Repair Services, Inc