A Credit to an Asset Account Was Posted as a Credit

question 54

Multiple Choice

A credit to an asset account was posted as a credit 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:

Credit Terms

Conditions under which credit is extended by a seller to a buyer, detailing the repayment period, interest rate, and penalties for late payment.

Discount

A reduction in the price of goods or services, usually offered to encourage purchase or provided for early payment.

Sales Tax

A tax imposed by a government on the sale of goods and services.

Credit Period

Length of time allowed for payment of goods sold on account.