If not corrected, how will this mistake affect the firm's financial statements?

S

Sirius

New member
A company paid cash to purchase equipment. The firm's bookkeeper mistakenly recorded this transaction by increasing Equipment Expense and decreasing Cash. If not corrected, how will this mistake affect the firm's financial statements?



a. net income and assets will be overstated

b. net income and assets will be understated

c. net income will be understated; total assets will be correct

d. total assets will be understated; net income will be correct

e. none of the above
 
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