Identify the effect (a through h) that omitting each of the following items would have on the balance sheet.
-No adjustment was made for supplies used up during the month.
A)Assets and owner's equity overstated
B)Assets and owner's equity understated
C)Assets overstated and owner's equity understated
D)Assets understated and owner's equity overstated
E)Liabilities and owner's equity overstated
F)Liabilities and owner's equity understated
G)Liabilities overstated and owner's equity understated
H)Liabilities understated and owner's equity overstated

Question

Quizplus · Accepted Answer

Not adjusting for supplies used up during the month means the supplies asset account remains higher than it should be, overstating assets. Since expenses are understated, net income is overstated, leading to an overstatement of owner's equity.

Identify the Effect (A Through H) That Omitting Each of the Following