A Debit to an Asset Account Was Posted to an Expense

question 132

Multiple Choice

A debit to an asset account was posted to an expense account. This error would cause

• A) liabilities to be overstated.
• B) expenses to be overstated.
• C) assets to be understated
• D) Both B and C are correct.

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Definitions:

Production Rates

The speed at which goods are manufactured or produced within a given time frame, often measured to assess efficiency and productivity levels.

Kinked Demand Curve

A theory in economics which suggests that price increases will not be followed by competitors in an oligopolistic market, leading to a situation where a firm faces a steeper demand curve for price increases and a more elastic demand curve for price decreases.

Price Stickiness

A situation in markets where prices of goods do not adjust immediately to changes in supply and demand conditions.

Profit-Maximizing Price

The price at which a firm can sell its product to maximize its profit, determined by various factors including demand, cost of production, and market competition.