Errors in Assets, Liabilities and Owners' Equity
Not what you're looking for?
How would the following errors affect the account balances and the basic accounting equation, Assets, Liabilities, Owners' Equity? How do the misstatements affect income?
a. The purchase of a truck is recorded as an expense instead of an asset.
b. A cash payment on accounts receivable is received but not recorded.
c. Fictitious sales on account are recorded.
d. A clerk misreads a handwritten invoice for repairs and records it as $1,500 instead of $1,800.
e. Payment is received on December 31 for the next three months' rent and is recorded as revenue.
Purchase this Solution
Solution Summary
This solution explains how the following errors affect the account balances and the basic accounting equation, Assets, Liabilities, Owners' Equity.
Solution Preview
How would the following errors affect the account balances and the basic accounting equation, Assets _Liabilities _Owners' Equity? How do the misstatements affect income?
a. The purchase of a truck is recorded as an expense instead of an asset.
The Assets will be understated and the expenses will be overstated. Thus the income will be reduced by this error.
b. A cash payment on accounts ...
Purchase this Solution
Free BrainMass Quizzes
Balance Sheet
The Fundamental Classified Balance Sheet. What to know to make it easy.
Social Media: Pinterest
This quiz introduces basic concepts of Pinterest social media
Basics of corporate finance
These questions will test you on your knowledge of finance.
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.