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Montering Correction of Accounting Errors Section 4-CORRECTING CURRENT PERIOD ACCRUAL ERRORS 1. If you accrue expenses of $130 instead of S1 So, the financial statements will overstate assets and understate expenses b. understate prepaid expenses c. understate both liabilities and expenses d. overstate liabilities 2. On November 1, 20X4, ComCo debits Cash and credits Notes Payable for $20,000 for note maturing May 1, 20X5. At that time, ComCo must repay the entire $20,000 plus interest of 6% accrued annually. If no adjusting entry is made at year-end 20X4. Como will record a correcting entry that: a debits Interest Expense for $400 b. credits Interest Payable for $100 c. debits Interest Expense for $200 d. none of the above Your employer has a Monday-Friday workweek and distributes its $20,000 payroll each Friday. In 20X1, December 31 is a Thursday. One of your assistants debited Salaries Expense and credited Salaries Payable for $12,000. If no correcting entry is recorded: a. the balance sheet will overstate assets b. the income statement will over state expenses e. the balance sheet will overstate liabilities d. the balance sheet will overstate retained earnings 4. Your employer has a Monday-Friday workweek and distributes its $35,000 payroll each Friday. In 20X2, December 31 is a Tuesday. One of your assistants debited Salaries Expense and credited Salaries Payable for $18,000. Your correcting entry will: a. debit Salaries Expense for $6,000 b. debit Salaries Payable for $6,000 c. credit Salaries Expense for $4,000 d. credit Salaries Payable for $4,000 5. A calendar year company plans to pay its December gas bill in January. As of December 31, no adjusting entry has been recorded. As a result: a. the balance sheet total will overstate assets b. the balance sheet total will overstate retained earnings c. the income statement total overstate expenses d. the balance sheet total will overstate liabilities On March 1, 20X1, your calendar year company borrows $10,000. Terms require repayment of principal and annual interest of 9% after 4 years. At year-end 20X1, an adjusting entry accrues $550 interest expense. If you discover the error before the books are closed, what is the correcting entry? a. Interest Payable 600 Interest Expense b. Interest Expense Interest Payable c. Interest Expense Interest Payable 200 600 600 200