If a Company Mistakenly Forgot to Record Depreciation on Office

question 64

Multiple Choice

If a company mistakenly forgot to record depreciation on office equipment at the end of an accounting period, the financial statements prepared at that time would show:

• A) Assets overstated and equity understated.
• B) Assets and equity both understated.
• C) Assets overstated, net income understated, and equity overstated.
• D) Assets, net income, and equity understated.
• E) Assets, net income, and equity overstated.

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Definitions:

Equalizer Type

A component in audio equipment or software that adjusts the balance between frequency components within an electronic signal.

Multi-leaf Spring Pack

A suspension component consisting of multiple layers of flat springs stacked together to provide support and absorb shocks.

Jounce

The action of a vehicle suspension compressing, usually in response to riding over bumps or during hard cornering.

Rebound

The reactive response of a spring after being compressed. It kicks back. Suspensions attempt to limit jounce and rebound cycles by using damping devices such as shock absorbers.