Accounting for IGCSE & O level - Accounting Procedures (Section 22 - No. 42)
A business owner discovered that depreciation expense was not recorded. What is the effect on the financial statements?
Assets are understated and profit is overstated.
Assets are overstated and profit is overstated.
Assets are understated and profit is understated.
Liabilities are overstated and owner's equity is unaffected.
Explanation
Failing to record depreciation results in overstated assets and profit.
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