The omission of the adjusting entry to record depreciation expense will result in an

A. understatement of assets and an understatement of owner's equity.

B. overstatement of assets and an overstatement of owners' equity.

C. overstatement of assets and an overstatement of liabilities.

D. overstatement of liabilities and an understatement of owners' equity.

Question

Brittany Brennan

Business

15 December, 07:03

The omission of the adjusting entry to record depreciation expense will result in an

A. understatement of assets and an understatement of owner's equity.

B. overstatement of assets and an overstatement of owners' equity.

C. overstatement of assets and an overstatement of liabilities.

D. overstatement of liabilities and an understatement of owners' equity.

+3

Answers (1)

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Rylee Patterson · Answer 1

B. overstatement of assets and an overstatement of owners' equity.

Explanation:

To recognize depreciation expense, the entries required are

Debit depreciation expense

Credit Accumulated depreciation

The accumulated depreciation is a credit balance in the fixed asset account. Depreciation is also an expense that reduces net income and thus reduces the owners equity.

Hence an mission of the adjusting entry to record depreciation expense will result in an overstatement of assets and an overstatement of owners' equity.