Question

Miss Hap, the company bookkeeper, recorded the annual repair costs on the company's machinery as an increase to the Machinery account. As a result, which of the following statements correctly describes this situation?

A. Expenses will be overstated.
B. Liabilities will be overstated.
C. Stockholders' equity will be understated
D. Assets will be overstated.

Answer 1

D

Step-by-step explanation:

Repairs shouldn’t be recorded to the equipment (asset) account but should be recorded as an expense instead.