If the Debit Amount of an Entry to Record the Purchase

question 84

Multiple Choice

If the debit amount of an entry to record the purchase of supplies on account was not posted:

• A) liabilities would be understated
• B) liabilities would be overstated
• C) assets would be overstated
• D) assets would be understated

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Definitions:

Gaps

Refers to missing elements or disparities in data, knowledge, or performance that need to be addressed.

Slow Payments

Payments made by a debtor that are consistently made later than agreed upon terms, leading to delayed receipt of funds by the creditor.

Days' Cash

The average number of days a company takes to collect cash from its sales.

Fiscal Year

A 12-month period that a company or government uses for accounting purposes and preparing financial statements, which may not align with the calendar year.