Trumble Company Purchased a Machine on January 1, 20X2, for $10,000

Multiple Choice

Trumble Company purchased a machine on January 1, 20X2, for $10,000. The company bookkeeper incorrectly used a six-year life instead of a five-year life to depreciate the machine. What would be the effect of this error on the 20X2 financial statements?

A) Overstatement of assets offset by an understatement of shareholders' equity.
B) Overstatement of assets offset by an understatement of retained earnings.
C) Overstatement of assets, profit, and shareholders' equity.
D) Overstatement of assets and an understatement of liabilities.