If an Accountant Forgot to Record Depreciation on Office Equipment

question 108

Multiple Choice

If an accountant forgot to record depreciation on office equipment at the end of an accounting period, what is the effect on the statements prepared at that time?

• A) Assets are overstated and equity is understated.
• B) Assets and equity are both understated.
• C) Assets are overstated, profit is understated, and equity is overstated.
• D) Assets, profit, and equity are understated.
• E) Assets, profit, and equity are overstated.

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Definitions:

Merger

The combining of two or more companies into a single entity, often to expand market share or reduce competition.

Consolidation

The process of combining multiple entities or financial accounts into a single entity or account for reporting purposes.

Involuntary Dissolution

The forced termination of a corporation's existence by court order, often due to failure to comply with legal requirements or because of actions detrimental to public interest.

Receiver

A court-appointed person responsible for taking custody of and managing property or assets for the benefit of creditors or other parties during legal proceedings.