What is the effect on the 2019 financial statements when a capital expenditure during 2019 was incorrectly recorded as a repairs and maintenance expense?

A) The financial statements are not affected.
B) Assets and net income are both overstated.
C) Assets are overstated and net income was understated.
D) Assets and stockholders' equity are both understated.

Repairs and Maintenance

The expenses a company incurs to keep its assets in working condition, not extending the life of the asset but rather restoring it or maintaining current condition.

Capital Expenditure

Long-term investments or expenditures made by a company to acquire or upgrade physical assets such as equipment, property, or industrial buildings.

Net Income

The amount of profit left over after all expenses and taxes have been subtracted from total revenue.