Question $6$

$2$ pts

Hoffman Co$.$ established a $$500$ petty cash fund. At the end of the current accounting period, Hoffman failed to replenish the fund or make the accompanying journal entry. As a result, what was the effect on Hoffman's net assets and expenses?

Expenses were overstated, but net assets were understated

Net assets were correct while expenses were understated

Net assets were overstated while expenses were understated

Both net assets and expenses were overstated