An Error of Omission Arises When

question 50

Multiple Choice

An error of omission arises when:

• A) Two or more errors cancel each other out.
• B) A transaction is posted to the correct type of account (income, expense, asset, liability or capital) but the wrong account is debited or credited.
• C) A transaction is completely missed out.
• D) A transaction is posted to the wrong type of account.

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Definitions:

Half Year Rule

A tax regulation in some jurisdictions that allows for only half of the applicable depreciation expense to be claimed in the year that an asset is purchased.

UCC

Refers to the Uniform Commercial Code, a set of laws that govern commercial transactions in the United States.

Cash Flow

The net amount of cash being transferred into and out of a business, especially affecting liquidity.

Dividends

Dividends represent distributions of earnings from a company to its shareholders, typically originating from the firm's profits.