Failure to record depletion for a given accounting period will result in
A)understated total assets.
B)understated total liabilities.
C)overstated net income.
D)overstated total liabilities.

Question

Quizplus · Accepted Answer

Failure to record depletion for a given accounting period will result in an overstatement of the net income because the depletion expense is not recognized as an expense, which reduces the overall income. Therefore, the absence of such recording will lead to an inaccurate presentation of the company's financial position. Understated total assets or overstated total liabilities may occur as a result of errors or omissions in recording other transactions.

Failure to Record Depletion for a Given Accounting Period Will