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  3. on may 1, a commercial baking company purchased a

On May 1, a commercial baking company purchased a commercial oven on account. The oven...

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Accounting

On May 1, a commercial baking company purchased a commercial oven on account. The oven costs $40,000, has a life of 5 years, and has no salvage value. The company ordinally uses straight-line depreciation. The company recorded the following transaction. Debit equipment maintenance expense $40,000; credit Accounts payable $40,000. The company paid for the oven in June. If the company does not correct this error before December 31, which impact will the error have on the balance sheet?

  • Property. plant, and equipment (PP&E) will be understated
  • Operating expenses will be understated
  • Property. plant and equipment (PP&E) will be overstated
  • Accumulated depreciation will be overstated

A pharmacy failed to notice that approximately $10,000 worth of its drugs had expired, so the pharmacy failed to record the adjustment to its inventory. Which impact will this error have on the pharmacy's balance sheet?

  • Inventory will be understated.
  • Current liabilities will be overstated.
  • Inventory will be overstated.
  • Current liabilities will be understated.

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