Some of the Following Errors Would Cause the Debit and Credit

question 188

Essay

Some of the following errors would cause the debit and credit columns of the trial balance to have unequal totals. For each of the four cases, state whether the error would cause unequal totals in the trial balance. If the error causes unequal totals, indicate the amount of difference between the columns and state whether the debit or credit is larger. Each case is to be considered independently of the others.
1. A payment of $800 to a creditor was recorded by a debit to Accounts Payable of $80 and a credit to Cash of $800.
2. A $480 payment for a printer was recorded by a debit to Equipment of $48 and a credit to Cash for $48.
3. An account receivable in the amount of $1,500 was collected in full. The collection was recorded by a debit to Cash for $1,500 and a debit to Accounts Payable for $1,500.
4. An account payable was paid by issuing a check for $800. The payment was recorded by debiting Accounts Payable $800 and crediting Accounts Receivable $800.

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Definitions:

Interest Rate

The percentage of a sum of money charged for its use, typically expressed on an annual basis, affecting loans, mortgages, savings, and investments.

Discounted Cash Flow

A technique for determining the value of an investment by considering the future cash flows it is projected to generate, factoring in the time value of money.

Present Value

Today's worth of a single sum or series of future cash flows, discounted at a particular rate of return.

Future Cash Flow

The amount of money that is expected to be received or paid out by an entity in the future, often considered for investment or project valuations.