For each of the following situations, indicate the effect on assets, net income, and retained earnings at
Question:
For each of the following situations, indicate the effect on assets, net income, and
retained earnings at December and as follows:
O if the financial statement element is overstated.
U if the financial statement element is understated.
NE if there is no effect on the financial statements.
Provide a brief explanation for your choice eg NI U expenses too high
Note: please present in a table form
a Depreciation expense on machinery is too high for and the
depreciation expense is correct. marks
b A year rental agreement was signed on Jan. and recorded as a
prepaid asset. No rent expense has been recognized. marks
c ending inventory was overstated by $; inventory
understated by $; inventory was correct. marks
d A machine with a year useful life was expensed when purchased in
marks
e Did not accrue interest expense on a note payable at Dec Interest
expensed when paid in