A Journal Entry for a $240 Payment to Purchase Office

question 8

Multiple Choice

A journal entry for a $240 payment to purchase office supplies was erroneously recorded as a debit to Office supplies for $600 and a credit to Cash for $240.Which of the following statements correctly states the effect of the error on the trial balance?

• A)The sum of the debits will exceed the sum of the credits by $240.
• B)The sum of the debits will exceed the sum of the credits by $360.
• C)The sum of the credits will exceed the sum of the debits by $360.
• D)The sum of the debits will exceed the sum of the credits by $600.

---

Definitions:

Spot Rate

The current market price of a currency, security, or commodity available for immediate delivery.

Interest Rate Parity

A theory asserting that the difference between the interest rates of two countries is equal to the difference between the forward exchange rate and spot exchange rate.

T-Bills

Short-term government securities issued at a discount from their face value, maturing in one year or less.

Exchange Rates

The rate at which one currency can be exchanged for another, influencing international trade and economic relationships between countries.