A Credit to an Asset Account Was Posted to a Liability

question 144

Multiple Choice

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

• A) assets to be understated.
• B) liabilities to be overstated.
• C) Capital to be understated.
• D) None of the above are correct.

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Definitions:

Variable Costs

Expenses that vary directly with the level of business activity.

Fixed Costs

Costs that do not vary with the level of output or sales, such as rent, salaries, and insurance premiums.

Internal Rate of Return

The discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero, used to evaluate the profitability of potential investments.

Accounting Basis

Refers to the method of recording accounting transactions; either on a cash basis or on an accrual basis.