Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Determine the effect of the following errors on a company's total revenue, total expenses, and net income. Indicate the effect by selecting Overstated (too much),
Determine the effect of the following errors on a company's total revenue, total expenses, and net income. Indicate the effect by selecting Overstated (too much), Understated (too little),or Not Affected.
Transactions | Total Revenue | Total Expenses | Net Income |
Example: A check for $325 was written to pay on account. The accountant debited Rent Expense for $325 and credited Cash for $325. | Not Affected | Overstated | Understated |
a. $615 was received on account from customers. The accountant debited Cash for $615 and credited Professional Fees for $615. | |||
b. The owner withdrew $1,500 for personal use. The accountant debited Salary Expense for $1,500 and credited Cash for $1,500. | |||
c. A check was written for $1,265 to pay the rent. The accountant debited Rent Expense for $1,625 and credited Cash for $1,625. | |||
d. $2,100 was received on account from customers. The accountant debited Cash for $2,100 and credited the Capital account for $2,100. | |||
e. A check was written for $525 to pay the phone bill received and recorded earlier in the month. The accountant debited Phone Expense for $525 and credited Cash for $525. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started