If an adjusting entry for depreciation is NOT made at the end of the accounting period,what is the effect on net income?
A)Net income will be too high.
B)Net income will be too low.
C)There will be no effect on net income.
D)Net income will not be affected in the current period,but will be overstated in the next period.

Question

Quizplus · Accepted Answer

If an adjusting entry for depreciation is not made at the end of the accounting period, the cost of the asset will not be allocated to the appropriate accounting periods. As a result, the expense of depreciation will not be recognized, causing net income to be overstated by the amount of depreciation expense that was not recorded. This means that net income will be too high.

If an Adjusting Entry for Depreciation Is NOT Made at the End