Question

Upon examining repair and maintenance costs recorded by Cane Company during the year, an auditor finds a material amount that should have been capitalized in property, plant and equipment. If this error is left uncorrected, how would it affect Cane’s reported net income and assets in its year-end financial statements?

Net Income                   Assets

A. Understate                Understate

B. Overstate Overstate

C. Overstate Understate

D. Understate Overstate

Answer 1

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