The accountant for the McCarthy Company forgot to make an adjusting entry to record depreciation for the current year. The effect of this error could be:

Question

Oswaldo Glenn

Business

6 December, 16:03

The accountant for the McCarthy Company forgot to make an adjusting entry to record depreciation for the current year. The effect of this error could be:

+5

Answers (1)

Know the Answer?

Elizabeth Wilkins · Answer 1

The correct answer is an overstatement of assets, net income and owner's equity.

Explanation:

By omitting the information regarding depreciation, the accountant of the McCarthy company ceased to recognize the accounting and real value of its operating assets. For this reason, the figures presented in the asset accounts do not reflect the real situation of the company, which affects the expense accounts and subsequently the general result that impacts within the heading of equity.