If a Company Initially Records an Expense Incorrectly as an Asset,explain

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The Answer is This mistake will overstate net income on the income statement and overstate assets and retained earnings on the balance sheet.If a company initially records an expense incorrectly as an asset,expenses are understated or too small.Since expenses are subtracted from revenues in arriving at net income,understating expenses will overstate net income reported on the income statement.Similarly,recording an expense as an asset will overstate assets on the balance sheet.Retained earnings on the balance sheet will also be overstated due to the overstatement of net income.

If a Company Initially Records an Expense Incorrectly as an Asset,explain

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