A Credit to an Asset Account Was Posted to a Revenue

question 13

Multiple Choice

A credit to an asset account was posted to a revenue account. This error would cause

• A) assets to be overstated.
• B) revenue to be overstated.
• C) expenses to be overstated.
• D) Both A and B are correct.

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Definitions:

Bank Cash

Bank Cash refers to the liquid assets held by a financial institution that is readily available for transactions and immediate withdrawal.

Cheques

A written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer or to a specified person, out of the drawer's bank account.

Clearing

The process of reconciling purchases and sales of various securities, commodities, or currencies and ensuring the correct transfer of funds.

Collection Float

The time period between when a check is deposited into a bank account and the funds become available.