What Is the Effect of Overstating 2018 Depreciation Expense

question 35

Multiple Choice

What is the effect of overstating 2018 depreciation expense?

• A)Accumulated depreciation will be understated for 2018.
• B)Net income for 2018 will be overstated.
• C)Ending retained earnings for 2018 will be understated.
• D)Ending retained earnings for 2018 will be overstated.

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Definitions:

Dividend Per Share

The amount of dividend paid out per share of stock, indicating the portion of a company's earnings distributed to shareholders.

Excess Cash

Excess cash refers to the amount of cash holdings that exceed the normal operational needs of a business, often considered for investment, debt repayment, or as a reserve against future risks.

Cash Dividend

A payment made by a company to its shareholders, usually in cash, out of its earnings.

Book Value

Book value is the net value of a company's assets as recorded on its balance sheet, calculated as total assets minus intangible assets (patents, goodwill) and liabilities.