A Trial Balance Taken at Year-End Showed Total Credits Exceeding

question 4

Multiple Choice

A trial balance taken at year-end showed total credits exceeding total debits by $4,950.This discrepancy could have been caused by:

• A)An error in the general journal where a $4,950 increase in Accounts Receivable was recorded as an increase in Cash
• B)A net income of $4,950
• C)The balance of $49,500 in Accounts Payable being entered in the trial balance as $4,950
• D)The balance of $5,500 in the Office Equipment account being entered on the trial balance as a debit of $550
• E)An error in the general journal where a $4,950 increase in Accounts Payable was recorded as a decrease in Accounts Payable

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Definitions:

Substitution Effect

The change in demand for a good or service caused by a change in its price, making consumers choose alternatives.

Budget Constraints

The limitations on the spending behavior of consumers based on their income and the prices of goods and services, determining the possible combinations of goods and services they can afford.

Substitution Effect

The economic understanding that as prices rise or incomes decrease, consumers will replace more expensive items with less costly alternatives.

Income Effect

The variation in a person's or economy's earnings and the effect of this variation on the demanded quantity of a product or service.