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The accountant for Main Street Jewelry Repair Services, Inc. forgot to make an adjusting entry for Depreciation Expense for the current year. Which of the following is an effect of this error?

A) Total assets are understated.
B) Revenues are overstated.
C) Total assets are overstated.
D) Net income is understated.

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hyderali230

Answer:

C) Total assets are overstated.

Explanation:

The journal Entry for the Depreciation is as follows:

Dr. Depreciation Expense          xxx

Cr. Accumulated Depreciation   xxx

By missing this Journal entry the Accumulated depreciation account will be understated as we know that this is a contra asset account and this will net off the Long term assets. So, as a result the total asset will be overstated.

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