Final answer:
OutCo's failure to record depreciation on certain machinery for 2011 affects its financial statements by overstating its assets and net income for that year.
Step-by-step explanation:
OutCo's failure to record depreciation on certain machinery for 2011 means that the company has overstated its assets and net income for that year. Depreciation is an important aspect of accounting as it accounts for the wear and tear of assets over time. By failing to record depreciation, OutCo's financial statements will not accurately reflect the true value of its machinery and its profitability.