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:

Piaget

A Swiss psychologist known for his pioneering work in child development, specifically his theory of cognitive development that describes how children construct a mental model of the world.

Hypothetical Moral Dilemmas

Imagined scenarios presented in moral and ethical dialogues or experiments to provoke thought, discussion, or analysis about moral reasoning and decision-making.

Interacting

The process of two or more entities or individuals influencing or having an effect on each other, typically through communication or direct contact.

Heteronomous Morality

The stage in moral development where children view rules as fixed and unchangeable, usually enforced by authority figures.