Woods Company made an ordinary repair to a delivery truck at a cost of $500. Woods' accountant debited the asset account, Equipment. Was this treatment an error, and if so, what will be the effect on Woods' financial statements?
A) No, the repair was accounted for correctly.
B) Yes, the error overstated assets and net income.
C) Yes, in the years following, net income will be overstated.
D) Yes, the error understated net income.
Answer: B
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