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Cara, Inc. purchased supplies costing €7,500 on January 1, 2017 and recorded the transaction by debiting an expense. At the end of the year €3,000 of the supplies are still on hand. If Cara, Inc. does not make the appropriate adjusting entry, what is the impact on its statement of financial position at December 31, 2017? a. Assets understated by €4,500. b. Equity understated by €4,500. C. Equity overstated by €3,000. d. Assets understated by €3,000. O8 BT: AP Difficulty: Hard TOT: 4 pmin A4CER. Aneludi

Cara, Inc. purchased supplies costing €7,500 on January 1, 2017 and recorded the transaction by debiting an expense. At the end of the year €3,000 of the supplies are still on hand. If Cara, Inc. does not make the appropriate adjusting entry, what is the impact on its statement of financial position at December 31, 2017? a. Assets understated by €4,500. b. Equity understated by €4,500. C. Equity overstated by €3,000. d. Assets understated by €3,000. O8 BT: AP Difficulty: Hard TOT: 4 pmin A4CER. Aneludi

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Cara, Inc. purchased supplies costing €7,500 on January 1, 2017 and recorded the transaction by debiting an expense. At the end of the year €3,000 of the supplies are still on hand. If Cara, Inc. does not make the appropriate adjusting entry, what is the impact on its statement of financial position at December 31, 2017? a. Assets understated by €4,500. b. Equity understated by €4,500. C. Equity overstated by €3,000. d. Assets understated by €3,000. d, LO 8, BT: AP, Difficulty: Hard, TOT: 4 min., AACSB: Analytic, AICPA BB: None, AICPA FN: Reporting, AICPA PC: Problem solving
Transcribed Image Text:Cara, Inc. purchased supplies costing €7,500 on January 1, 2017 and recorded the transaction by debiting an expense. At the end of the year €3,000 of the supplies are still on hand. If Cara, Inc. does not make the appropriate adjusting entry, what is the impact on its statement of financial position at December 31, 2017? a. Assets understated by €4,500. b. Equity understated by €4,500. C. Equity overstated by €3,000. d. Assets understated by €3,000. d, LO 8, BT: AP, Difficulty: Hard, TOT: 4 min., AACSB: Analytic, AICPA BB: None, AICPA FN: Reporting, AICPA PC: Problem solving
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