Which one of the following statements is NOT correct?
A) A misclassification in the balance sheet will have no effect on operating income.
B) Either an overstatement of an asset account or an understatement of a liability account would have the same effect on the income statement.
C) Either an understatement of an asset account or an overstatement of a liability account would have the same effect on the income statement.
D) Either an overstatement of an asset account or an overstatement of a liability account would have the same effect on the income statement.

Question

Quizplus · Accepted Answer

Overstatement of an asset account and overstatement of a liability account do not have the same effect on the income statement. Overstating an asset does not directly affect income, while overstating a liability can understate net income.

Which One of the Following Statements Is NOT Correct