Providing Services to a Credit Customer Was Recorded with a Debit

question 92

Multiple Choice

Providing services to a credit customer was recorded with a debit to Cash and a credit to Retained Earnings.This error would cause:

• A)the period's net income to be understated.
• B)the period end liabilities to be understated.
• C)the total period end stockholders' equity to be understated.
• D)the period's net income to be overstated.

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Definitions:

Transferability

The ability of a financial instrument, asset, or property right to be transferred from one party to another.

Instrument

A legal document formally recording a right, liability, or transaction.

Payment

The act of providing money or other compensation to fulfill a transaction or obligation.

Order Paper

A financial or legal document that is payable to the holder or the individual whose name appears on the document.