During the current financial year, the owner of Omega Enterprises withdrew supplies of $2,000 for personal use. The accountant debited Rent Expense for $2,000 and credited Supplies for $2,000. This error in the journal will result in:
A) the understatement of Net Income.
B) the understatement of Supplies.
C) the understatement of Total Owner's Equity.
D) the overstatement of Supplies.
E) the understatement of Rent Expenses.

Question

Quizplus · Accepted Answer

The error will result in the understatement of Net Income because the Rent Expense account will be overstated by $2,000 and the Supplies account will be understated by $2,000. This will result in a decrease in Net Income of $2,000.

During the Current Financial Year, the Owner of Omega Enterprises