If expenses are understated on the income statement,shareholders' equity is overstated on the statement of financial position.

Name: If expenses are understated on the income statement,shareholders' equity is overstated on the statement of financial position.
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Understating expenses leads to overstated net income, which increases retained earnings and thus overstates shareholders' equity on the statement of financial position.

If Expenses Are Understated on the Income Statement,shareholders' Equity Is