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:

Oligarchy

A form of government where power effectively rests with a small number of people, distinguished by royalty, wealth, family ties, education, corporate, or military control.

Aristocracy

A class of people considered to have superior status or privileges, often inherited, based on noble lineage, wealth, or titles.

Direct Democracy

A form of democracy where the people vote on policies directly, rather than through elected representatives.

Representative Democracy

A system of government where citizens elect representatives to make decisions on their behalf.