At the End of the Fiscal Year, the Usual Adjusting

question 209

Multiple Choice

At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted. Which of the following is true?

• A) Total assets will be understated at the end of the current year.
• B) The balance sheet and income statement will be misstated, but the statement of owner's equity will be correct for the current year.
• C) Net income will be overstated for the current year.
• D) Total liabilities and total assets will be understated.

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Definitions:

Financial Information

Data regarding the financial performance and condition of an entity, including income statements, balance sheets, and cash flows.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a certain period of time; it measures the efficiency of inventory management.

Financial Information

Data relating to the financial status or operations of a business, including balance sheets, income statements, and cash flow statements.

Times Interest Earned

A financial ratio that measures a company's ability to service its debt by comparing operating income to interest expense.