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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