Question

A credit to an asset account was posted to an expense account. This would cause __________. Question 2 options: assets to be overstated liabilities to be understated capital to be understated expenses to be overstated

Answer 1

assets to be overstated

Explanation:

Given that a credit to an asset account was posted to an expense account.

We know that debit all comes in and credit all goes out for asset account

When asset account has to be credited there is a sale of asset and hence asset has to be reduced in value.

If wrongly posted to expenses account, then expenses would be credited by that amount. This will give assets a higher value and expenses a lower value.

When expenses are lower, profits high and hence capital would be ovestated.

So correct option is

assets to be overstated