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

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 17, 2024

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.