Accounting for IGCSE & O level - Accounting Procedures (Section 27 - No. 47)
What is the impact on the accounting equation if depreciation expense of $2,000 was not recorded?
Assets are overstated by $2,000 and owner's equity is overstated by $2,000.
Assets are understated by $2,000 and owner's equity is understated by $2,000.
Assets are unaffected and owner's equity is overstated by $2,000.
Liabilities are overstated and owner's equity is unaffected.
Explanation
Not recording the depreciation leads to overstated assets and owner's equity due to profit.
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