The purchase of land for $50,000 cash was incorrectly recorded as an increase in land and an increase in notes payable. Which of the following statements is correct? A. The accounting equation will not balance because cash is overstated by $50,000. B. The accounting equation will not balance because notes payable are overstated by $50,000. C. The accounting equation will not balance because assets will exceed liabilities by $50,000. D. Even though a recording error has been made, the accounting equation will balance.
The purchase of land for $50,000 cash was incorrectly recorded as an increase in land and an increase in notes payable. Which of the following statements is correct? A. The accounting equation will not balance because cash is overstated by $50,000. B. The accounting equation will not balance because notes payable are overstated by $50,000. C. The accounting equation will not balance because assets will exceed liabilities by $50,000. D. Even though a recording error has been made, the accounting equation will balance.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter14: Statement Of Cash Flows
Section: Chapter Questions
Problem 35E: Jarem Company showed 189,000 in prepaid rent on December 31, 20X1. On December 31, 20X2, the balance...
Related questions
Topic Video
Question
The purchase of land for $50,000 cash was incorrectly recorded as an increase in land
and an increase in notes payable. Which of the following statements is correct?
A. The accounting equation will not balance because cash is overstated by $50,000.
B. The accounting equation will not balance because notes payable are overstated by $50,000.
C. The accounting equation will not balance because assets will exceed liabilities by $50,000.
D. Even though a recording error has been made, the accounting equation will balance.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning