the accountant of newton legal services failed to make an adjusting entry for supplies that had been used…

the accountant of newton legal services failed to make an adjusting entry for supplies that had been used for the year. assume the supplies were initially recorded as an asset. which of the following statements is true? a. the total assets will be overstated. b. the total liabilities will be overstated. c. the equity will be understated. d. the total assets will be understated.

the accountant of newton legal services failed to make an adjusting entry for supplies that had been used for the year. assume the supplies were initially recorded as an asset. which of the following statements is true? a. the total assets will be overstated. b. the total liabilities will be overstated. c. the equity will be understated. d. the total assets will be understated.

Answer

Answer:

A. The total assets will be overstated.

Explanation:

Step1: Understand adjusting entry

When supplies are used, an adjusting entry should reduce supplies (an asset) and increase supplies - expense.

Step2: Analyze non - entry effect

Since the adjusting entry was not made, the supplies asset account still has the full amount of supplies, even though some have been used. So, total assets are overstated. Liabilities are not affected by this error, and since expenses are understated, net income and equity are overstated, not understated.