The accountant of Newton Legal Services failed to make an adjusting entry for supplies that had been used for the year.Assume the supplies were initially recorded as an asset.Which of the following statements is TRUE?
A) The total liabilities will be overstated.
B) The equity will be understated.
C) The total assets will be overstated.
D) The total assets will be understated.

Question

Quizplus · Accepted Answer

If the supplies were not adjusted, the initial asset balance recorded will still be included in the total assets. This will overstate the total assets of the company since the supplies have already been used and not available anymore.

The Accountant of Newton Legal Services Failed to Make an Adjusting