The Collection of an Account Receivable Is Recorded by a Debit

question 80

Multiple Choice

The collection of an account receivable is recorded by a debit to Cash and a credit to Accounts Payable. If this error is not corrected:

• A) Total liabilities are understated.
• B) Total assets are understated.
• C) Total liabilities are overstated.
• D) Equity is overstated.

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Definitions:

Insurance

Insurance is a financial product that provides protection against financial losses or liabilities stemming from unforeseen events, such as accidents, natural disasters, or health issues, to the insured, in exchange for payment of a premium.

Expensive Vase

A high-cost container, often decorative and made of precious materials, used typically for displaying flowers.

Extended Benefits

Refers to additional benefits provided beyond the standard offerings, often in the context of unemployment insurance, health insurance, or retirement plans, aiming to offer added security during specific circumstances.

Overlapping

Refers to situations or areas where elements or responsibilities cover the same portion or aspect, leading to potential conflicts or redundancies.