While Reviewing the Books of Edberg Pest Control Service You

Multiple Choice

While reviewing the books of Edberg Pest Control Service you discover that no adjusting entry was made for estimated bad debts traceable to sales in 2012 the company's first year of operation) .Assuming this error is not corrected which of the following is true at year-end 2012?

A) Assets are understated,profit is overstated
B) Liabilities are overstated,profit is understated
C) Assets are correct,profit is overstated
D) Assets are overstated,profit is overstated