In 20B, Gamma Company Made an Ordinary Repair to a Delivery

question 37

Multiple Choice

In 20B, Gamma Company made an ordinary repair to a delivery truck at a cost of $300. Gamma's accountant debited the asset account, Delivery Vehicles. Was this treatment an error, and if so, what will be the effect on the financial statements of Gamma?

• A) In the years following 20B, net income will be too high.
• B) The error increased assets and profit in 20B.
• C) The error decreased profit in 20B.
• D) The repair was accounted for correctly.