Practice Examination
Combined Chapters 1-4
Dr. Fred Barbee
Solution to Short-Problem #2
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ACCT 201 Principles of Financial Accounting Practice Examination Combined Chapters 1-4 Dr. Fred Barbee Solution to Short-Problem #2 |
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Short Problem #2
| On December 31 of Year 1 a company forgot to record $7,000 of depreciation on office equipment. In the Year 1 financial statements, what is the effect of this error on assets, net income, and equity? |
| 1. | Assets are overstated by $7,000 |
| 2. | Net Income is overstated by $7,000 |
| 3. | Equity is overstated by $7,000 |