A debit to an asset account was posted to an expense account. This error would cause
A) liabilities to be overstated.
B) expenses to be overstated.
C) assets to be understated
D) Both B and C are correct.

Question

Quizplus · Accepted Answer

The error of posting a debit intended for an asset account to an expense account would lead to expenses being overstated because the expense account would have a higher balance than it should. Simultaneously, assets would be understated because the asset account would not receive the debit it should have, resulting in a lower balance than intended.

A Debit to an Asset Account Was Posted to an Expense