At the End of the Fiscal Year, the Usual Adjusting

question 98

Multiple Choice

At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted. Which of the following statements 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 retained earnings statement 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:

Recorded

The act of documenting or entering financial transactions in the accounting records of a company.

Actuarial Estimates

Projections based on statistical methods by actuaries to assess risks and forecast future financial obligations.

Defined Benefit Pension Plans

Pension plans where an employer promises a specified pension payment upon retirement, based on an employee's earnings history, tenure of service, and age.

OCI

Other Comprehensive Income includes revenues, expenses, gains, and losses that are not included in net income, affecting the equity section of the balance sheet.