If a Company Incorrectly Records a Payment as an Asset

question 202

Multiple Choice

If a company incorrectly records a payment as an asset instead of an expense,how will this error affect net income in the current period?

• A)Net income will be too high.
• B)Net income will be too low.
• C)Net income will not be affected by this error in the current period,but will be too low in a later period.
• D)Net income will never be affected by this error because assets are reported on the balance sheet.

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Definitions:

Instincts

are innate, typically fixed patterns of behavior in animals and humans that are responses to specific stimuli and serve survival and reproductive purposes.

Cognition

Refers to the mental processes involved in gaining knowledge and comprehension, including thinking, knowing, remembering, judging, and problem-solving.

Seligman

Refers to Martin Seligman, a psychologist known for his work on the theory of learned helplessness and for promoting positive psychology.

Prepared Behaviors

Instinctual or predisposed behaviors that organisms are born with, which enhance survival and adaptation.