Newell Company Has Acquired Land and Paid $500 as a Brokerage

question 134

Multiple Choice

Newell Company has acquired land and paid $500 as a brokerage commission to acquire the land.However,the company's accountant has recorded the $500 as a revenue expenditure.What is the effect of this error?

• A) Net income is understated by $500.
• B) Liabilities are overstated by $500.
• C) Revenue is overstated by $500.
• D) Assets are overstated by $500.

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Definitions:

Arrested Growth

A halt or significant slowdown in the development or expansion of something, often due to external factors.

Pottery

The craft or profession of making objects from clay, which are then hardened by heat, widely used for cooking, storage, and decorative purposes throughout human history.

Sedentary Society

A society whose members settle in one place, establishing permanent homes and communities, as opposed to nomadic lifestyles.

Neolithic Transition

The period marking the shift from hunter-gatherer societies to agricultural communities, leading to the development of settled life and the beginnings of civilization.