A Debit to an Expense Account Was Posted to an Asset

question 116

Multiple Choice

A debit to an expense account was posted to an asset account. This would cause

• A) assets to be understated.
• B) liabilities to be understated.
• C) capital to be understated.
• D) expenses to be understated.

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Definitions:

Treasury Shares

Shares that were issued and then repurchased by the issuer, reducing the quantity of outstanding stock.

Outstanding Shares

The total number of shares of a company's stock currently held by all its shareholders, including share blocks and restricted shares.

Issued Shares

The total number of shares that have been sold to and are held by shareholders.

Paid-In Capital

The amount of capital "paid in" by investors during common or preferred stock issuances, including the par value of the shares plus any amount paid in excess.