Question

Failure to record depreciation expense for the period results in which of the following? a. Net...

Failure to record depreciation expense for the period results in which of the following?

a.

Net income being overstated.
b.

No effect on total assets.
c.

Stockholders' equity being overstated.
d.

Both a and c.
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The correct option is D. Both a and c

Failure to record depreciation results in assets and owner's equity being overstated on the balance sheet. If we neglect the concept of depreciation, the effect on books of accounts would be, the assets wont be at its real value, which result in inaccuracy of the financial position of the company. If we do not charge depreciation, the value of asset will be over recorded in the books of accounts. If the asset value is higher than the actual value, then the books accounts show a higher profit than earned which is not recommended. So. negligence of depreciation may sometimes hide the losses incurred in the business. Thus, Both A and C are correct option.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
What is the effect on the financial statements when a company fails to accrue wages expense...
What is the effect on the financial statements when a company fails to accrue wages expense at year-end? (a) Net income is overstated and liabilities are understated. (b) Expenses are understated and stockholders' equity is understated (c) Expenses and liabilities are both overstated. (d) Net income is overstated and liabilities are properly reported.
A) Which of the following statements is true? A. A credit to Utilities Expense would decrease...
A) Which of the following statements is true? A. A credit to Utilities Expense would decrease Retained Earnings. B. Cash, Dividends, Accumulated Depreciation, and Wage Expense all have debit balances. C. Expenses are increased with a debit, and decrease stockholders’ equity. D. The issuance of stock decreases a company’s assets and increases its stockholders’ equity. E. If a company purchases inventory on account, its total assets will not change. B) A company completes a job for which it had previously...
From the income statement: Depreciation expense Interest expense $170,000 25,000 Income tax Net income 34,000 73,000...
From the income statement: Depreciation expense Interest expense $170,000 25,000 Income tax Net income 34,000 73,000 From the balance sheet: Current liabilities $95,000 Long-term debt 560,000 Deferred income taxes     28,000 Total Liabilities $680,000 Preferred stock 7,000 Common stock 225,000 Premium on common stock 125,000 Retained earnings 445,000 Total Stockholders’ Equity $802,000 Total Liabilities & Stockholders’ Equity $1,482,000 What is the Times Interest Earned ratio?    _________ /_______ = ___________    What is the Debt/Assets (Debt) ratio?     ________________ /___________ = __________...
The increase in owners' equity for a given period is equal to A. positive net cash...
The increase in owners' equity for a given period is equal to A. positive net cash flow minus dividends. B. net income minus dividends. C. sales minus dividends. D. gross profit minus distributions to shareholders. 2. A corporation has annual sales of $18 million, total assets of $4 million, a debt ratio of 40%, depreciation expense of $200,000, and a tax rate of 40%. The corporation's total stockholders' equity is equal to A. $5,600,000. B. $2,400,000. C. $1,800,000. D. $2,800,000.
1. Stuart Company purchased a computer that cost $5,000. It had an estimated useful life of...
1. Stuart Company purchased a computer that cost $5,000. It had an estimated useful life of five years and no residual value. The computer was depreciated by the straight-line method and was sold at the end of the third year of use for $3,000 cash. Which of the following statements correctly describes the computer sale? A. Assets and stockholders' equity both increase by $3,000. B. Assets increase $3,000 and stockholders' equity is not affected. C. Assets and stockholders' equity both...
Which accounts are closed with debits each accounting period? Select one: a. Wage Expense    Supplies    Service...
Which accounts are closed with debits each accounting period? Select one: a. Wage Expense    Supplies    Service Revenue No No No b. Wage Expense    Supplies    Service Revenue    No Yes No c. Wage Expense    Supplies    Service Revenue    No No Yes d. Wage Expense    Supplies    Service Revenue    Yes No No e. Wage Expense    Supplies    Service Revenue Yes Yes Yes Clear my choice Question 7 Not yet answered Points out of 2.0 Flag question Question text Which of the following accounts are closed during...
What would be the adjusting entry to record depreciation each period? A. Debit Equipment Expense, Credit...
What would be the adjusting entry to record depreciation each period? A. Debit Equipment Expense, Credit Equipment B. Debit Depreciation Expense, Credit Accumulated Depreciation C. Debit Depreciation Expense, Credit Equipment D. Debit Accumulated Depreciation, Credit Depreciation Expense
When a company owes employee salaries at the end of the period but fails to make...
When a company owes employee salaries at the end of the period but fails to make an adjusting entry for that amount owed, which of the following is true? Net income in the income statement is overstated. Retained earnings in the statement of stockholders' equity is overstated. Total stockholders' equity in the balance sheet is overstated. All of the other answers are correct.
zigs industries had the following operating results for 2011: sales=$27360, cost of goods sold=$19260;depreciation expense=$4,860;interest expense=...
zigs industries had the following operating results for 2011: sales=$27360, cost of goods sold=$19260;depreciation expense=$4,860;interest expense= $2190;dividends paid =$1560. at the beginning of the year, net fixed assets were $16380, current asset were $5760 and current liabilities were $3240. at the end of the year, net fixed assets were $20160, current assets were $7116 and current liabilities were $3780. the tax rate for 2011 was 34%. a. what is net income for 2011? b. what is the operating cash flow...
30. If the adjusting entry to record the accrued interest revenue is omitted: Select one: a....
30. If the adjusting entry to record the accrued interest revenue is omitted: Select one: a. net income would be overstated and liabilities would be overstated. b. net income would be understated and assets would be understated. c. net income would not be affected but assets would be overstated. d. no impact on both net income and assets.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT