On December 31,2012,the Adjusting Entry for Depreciation Was Made Incorrectly

On December 31,2012,the adjusting entry for depreciation was made incorrectly.The following is the entry which was made erroneously: $$\begin{array} { | l | r | r | } \hline \text { Depreciation expense } & 1,500 & \\\hline \text { Accumulated depreciation } & & 1,500 \\\hline\end{array}$$ The correct amount of depreciation should have been $5,100.Consider the effects of this error on the balance sheet,and identify which of the following statements is TRUE.

A) Total liabilities are overstated by $3,600.
B) Total liabilities are understated by $3,600.
C) Total assets are overstated by $3,600.
D) Total assets are understated by $3,600.

Correct Answer:

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