Assume That a Company Using a Purchases Journal Made an Error

question 53

Multiple Choice

Assume that a company using a purchases journal made an error in totaling the journal's accounts payable column. The error should be discovered:

• A) When the purchases journal is posted to the general ledger.
• B) When the sum of the vendor accounts does not equal the balance in the Purchases journal.
• C) When the total of the schedule of accounts payable is compared with the balance of the Accounts Payable account.
• D) When the creditors receive their payments.
• E) When the financial statements are prepared.

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Definitions:

Economic Profit

The difference between total revenues and total costs, including both explicit and implicit costs.

Allocation of Resources

The process of distributing scarce resources among different uses and users.

Resource Use

The manner in which natural resources are exploited and utilized to meet human needs or economic applications.

Economic Profit

The difference between the total revenue generated by a business and the total costs, both explicit and implicit, including opportunity costs.