Final answer:
If depreciation is not recorded, it leads to an overstatement of both assets and equity on the financial statements.
Step-by-step explanation:
If an accountant forgot to record depreciation on office equipment at the end of an accounting period, the effect on the financial statements prepared at that time would be overstated assets and overstated equity. This is because depreciation is an expense that reduces the value of assets and also reduces net income, which in turn reduces retained earnings, a component of equity.Since the expense was not recorded, the assets are not reduced by the correct accumulated depreciation, and they appear higher than they should be. Similarly, because the expense reduces net income, the equity would also be higher due to an overstatement of net income from under-recording expenses.
The answer to the student's question is: a) Overstated assets and equity.The effect on the statements prepared at that time if an accountant forgot to record depreciation on office equipment at the end of an accounting period is c) Overstated expenses and understated assets.When depreciation is not recorded, expenses are understated because the cost of using the equipment is not recognized. At the same time, assets are overstated because the value of the office equipment on the balance sheet does not reflect the decrease in value due to depreciation. This can distort the financial statements and give a misleading picture of the company's financial health.