Trumble Company Purchased a Machine on January 1, 20X2, for $10,000

question 167

Multiple Choice

Trumble Company purchased a machine on January 1, 20X2, for $10,000. The company bookkeeper incorrectly used a six-year life instead of a five-year life to depreciate the machine. What would be the effect of this error on the 20X2 financial statements?

• A) Overstatement of assets offset by an understatement of shareholders' equity.
• B) Overstatement of assets offset by an understatement of retained earnings.
• C) Overstatement of assets, profit, and shareholders' equity.
• D) Overstatement of assets and an understatement of liabilities.

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