The Collection of an Account Receivable Is Recorded by a Debit

question 136

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)Owners' equity is overstated.

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Definitions:

Deposits

Funds placed into an account at a financial institution for safekeeping and potential interest earnings.

Investment Securities

Financial instruments purchased with the aim of generating income or appreciating in value, such as stocks, bonds, and mutual funds.

Raise Capital

The process by which a company or organization obtains money for growing operations, typically through the issuance of stocks or bonds.

Investment Bankers

Professionals who work for financial institutions, facilitating mergers, acquisitions, and issuing of securities for corporations and governments.