The Accountant for Barnes Architectural Services Failed to Make an Adjusting

question 89

Multiple Choice

The accountant for Barnes Architectural Services failed to make an adjusting entry to record $7,000 of depreciation expense.Which of the following is TRUE?

• A) Total liabilities are overstated.
• B) Total liabilities are understated.
• C) Total assets are overstated.
• D) Total assets are understated.

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Definitions:

Exact Simple Interest

Exact simple interest is a calculation method where interest accrues on a principal sum at a constant rate over a specific time period, using a 365-day year for calculations.

365-Day Year

A method used in finance that assumes a year consisting of 365 days for calculating interest, ignoring leap years.

Exact Simple Interest

Interest calculated on the initial principal of a loan or deposit, based on a precise calculation method rather than the common approximation methods.

365-Day Year

A method used in finance and accounting that assumes a year consists of 365 days to simplify interest rate calculations, disregarding leap years.