Assume that Muscular Consulting erroneously recorded the payment of $7,500 of owner withdrawals as a debit to Salary Expense. (a) How wouldthis error affect the equality of the trial balance? (b) How would this error affect the income statement, statement of owner’s equity, and balance sheet?
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Assume that Muscular Consulting erroneously recorded the payment of $7,500 of owner withdrawals as a debit to Salary Expense. (a) How would
this error affect the equality of the
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- For each of the following situations, indicate whether itrepresents an accounting error and explain why it is or isnot an error. Also state whether a trial balance would indicate that an error exists for each situation.b. Revenue was recognized when a customer purchased agift card for future use.The collection of customer’s account is credited to accounts payable. What is the effect of the error in the net income of the current period and in subsequent period? Group of answer choices A. Cannot be determined based on the given information B. Understated C. Overstated D. No effectAssume that Sunshine Realty Co. borrowed $300,000 from Columbia First Bank and Trust. In recording the transaction, Sunshine erroneously recorded the receipt as a debit to Cash, $300,000, and a credit to Fees Earned, $300,000. (a) How would this error affect the equality of the trial balance? (b) How would this error affect the income statement, statement of owner’s equity, and balance sheet?
- The collection of customer’s account is credited to accounts payable. What is the effect of the error in assets and liabilities of the entity? a.Assets - overstated; Liabilities - understated b.Assets - overstated; Liabilities - overstated c.Assets - understated; Liabilities - understated d.Assets - understated; Liabilities - overstatedFor each of the following situations, indicate whether itrepresents an accounting error and explain why it is or isnot an error. Also state whether a trial balance would indicate that an error exists for each situation.c. An expense was recorded as an assetThe collection of customer’s account is credited to accounts payable. What is the effect of the error in assets and liabilities of the entity? Assets - overstated; Liabilities - understated Assets - understated; Liabilities - understated Assets - overstated; Liabilities - overstated Assets - understated; Liabilities - overstated
- The accountant for Kerns company mistakenly posted an expense amount as an asset in the general ledger. What is the financial statement impact of this error?The payment of supplier’s account is debited to accounts receivable. What is the effect of the error in assets and liabilities of the entity? Group of answer choices a. Assets - understated; Liabilities - understated b. Assets - understated; Liabilities - overstated c. Assets - overstated; Liabilities - overstated d. Assets - overstated; Liabilities - understated3. Regarding the underlying conceptual basis of accounting for compensated absences, review the following statements. Check the TRUE statement(s). Check all that apply. -The payment is probable and can be reasonably estimated. -The accounting treatment for compensated absences follows the matching principle. -The amount represents an expense that has been incurred but not yet paid -The amount represents revenue that has not been recognized. -The amount owed for compensated absences is reflected on the Income Statement.
- If the income statement error is discovered in the year of error, what action is to be done by the entity? a. Reclassify the item to its proper nominal account. b. Reclassify the item to real account. c. Adjust the effect to the retained earnings account. d. Ignore the error.Which of the following is not a characteristic of non-counterbalancing error? a. If not detected, this is not automatically corrected in the next accounting period. b. The income statement of the period in which the non-counterbalancing error is committed is misstated. c. The statement of financial position of the year of non-counterbalancing error and succeeding statement of financial position are incorrect until the error is corrected. d. If the net income of one year is understated due to non-counterbalancing error, the net income of subsequent year is also affected.For each of the following situations, indicate whether itrepresents an accounting error and explain why it is or isnot an error. Also state whether a trial balance would indicate that an error exists for each situation.d. The debit side of a journal entry was recorded in theaccounts, but the credit side was not.