The Accountant Failed to Make the Adjusting Entry to Record

question 5

Multiple Choice

The accountant failed to make the adjusting entry to record the depreciation for the year.This error would cause

• A)an overstatement of assets
• B)an overstatement of expenses
• C)an understatement of liabilities
• D)an understatement of owners' equity

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Definitions:

Inventory

The complete list of goods or materials a company holds, intending to sell it in the regular course of business.

Conversion Costs

The combined costs of direct labor and manufacturing overheads that are incurred to convert raw materials into finished goods.

Raw And In Process

Materials that are either in their natural state and used in the manufacturing of products or materials that are partially processed but not yet completed.

Inventory

The total amount of goods and materials held by a company for the purpose of resale or production.