Asked by Noemi Villalobos on Jul 17, 2024
Verified
Depreciation on equipment was not recorded.
Depreciation
The process of allocating the cost of a tangible asset over its useful life, reflecting the decrease in value of the asset over time.
Balance Sheet
A financial report that offers a glimpse into a company's financial health at a given moment, breaking down the company's assets, debts, and owner's equity.
Equipment
Durable goods used in the operation of a business, not intended for sale, often contributing to the production of other goods or services.
- Discern the implications for financial statements when adjustments are overlooked.
Verified Answer
TM
Talal MahmoodJul 22, 2024
Final Answer :
a
Explanation :
Depreciation expense reduces the book value of assets (equipment, in this case) and decreases net income, which in turn reduces owner's equity. If depreciation is not recorded, both assets and owner's equity would be overstated because the expense that should reduce them is not recognized.
Learning Objectives
- Discern the implications for financial statements when adjustments are overlooked.