A Receipt of $12,600 Cash from a Customer as a Payment

question 83

Multiple Choice

A receipt of $12,600 cash from a customer as a payment on their account was incorrectly credited to Rent Revenue. What is the effect of this error on the financial statements of the company?

• A) Assets are understated by $12,600 and owners' equity is understated by $12,600.
• B) Assets are overstated by $12,600 and owners' equity is overstated by $12,600.
• C) Assets are overstated by $25,200 and owners' equity is overstated by $25,200.
• D) Assets are understated by $12,600 and liabilities are understated by $12,600.
• E) Assets are understated by $25,200 and owners' equity is understated by $25,200.

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Definitions:

United States Government

The federal government of the United States, a constitutional republic composed of three distinct branches: legislative, executive, and judicial.

Violent Crime

Criminal acts that use or threaten to use violence against people, encompassing offenses like physical attack, theft under threat, and murder.

Institutionalized Means

Established methods and procedures within societies for achieving valued goals, such as wealth, status, or power, that are widely accepted and sanctioned.

Cultural Goals

The idealized life objectives and values that a society encourages its members to pursue.