A Company Replaced an Engine on a Vehicle and Debited

question 104

Multiple Choice

A company replaced an engine on a vehicle and debited the amount to repairs expense, rather than debiting the "vehicle" account. Which of the following would occur because of this error?

• A) Repairs Expense would be understated.
• B) Net Income would be overstated.
• C) The asset "vehicle" would be overstated.
• D) The asset "vehicle" would be understated.
• E) Shareholders' Equity would be overstated.

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Definitions:

Southern Economy

Historically, the economy of the southern United States, which was heavily reliant on agriculture, particularly the cultivation of cotton and other cash crops, and was significantly impacted by slavery until the Civil War.

Planter Families

Wealthy families in the American South before the Civil War, who owned large plantations and numerous slaves to work on these estates.

Physical Labor

refers to work that involves manual, bodily effort; tasks that demand physical strength, as opposed to mental or clerical work.

Economic Revival

A period of renewed economic growth and increased prosperity following a downturn or recession.