Correcting Asset Recording Errors Steps:

• Omitted machine purchase: Debit non-current assets +$5,000 and credit bank -$5,000, increasing non-current assets and decreasing current assets (working capital -$5,000).
• Misclassified vehicle purchase: Reclassify from repair expense to non-current assets by debiting assets +$15,000 and crediting expense +$15,000, increasing non-current assets and equity (no working capital change).
• Combined effect: Non-current assets increase by $20,000 total; working capital decreases by$5,000 from machine correction only.

Why C is correct:

• Working capital (current assets - current liabilities) decreases solely due to the bank adjustment for the omitted machine, per balance sheet equation (assets = liabilities + equity).

Why the others are wrong:

• A: Ignores machine addition, understating non-current assets increase.
• B: Falsely claims no working capital effect, overlooking bank reduction.
• D: Vague and incomplete on working capital impact.

Final answer: C