The bookkeeper of Rollins Legal Services included the cost of a new computer, purchased on December 30 for $5,000 and to be paid for in cash in January, as an operating expense instead of an addition to the proper asset account. What was the effect of this error (“no effect,” “over-stated,” or “understated” —use symbols N, O, or U, respectively) on the following?
1. Total assets as of December 31
2. Total liabilities as of December 31
3. Operating expenses for the year ended December 31
4. Profit from operations for the year
5. Retained earnings as of December 31 after the books are closed

  • CreatedFebruary 20, 2015
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