What Is the Effect of the Following Error? the Owner

question 25

Multiple Choice

What is the effect of the following error? The owner withdrew $3,000 for personal use. The accountant debited Wages Expense for $3,000 and credited Cash for $3,000.

• A)Net Income was understated.
• B)Cash was understated.
• C)Total Owner's Equity was understated.
• D)Cash was overstated.
• E)Wages Expenses were understated.

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Definitions:

Foreign-Currency Exchange

The system through which one currency is converted into another, enabling international transactions without the impediment of differing national currencies.

U.S. Resident

An individual who lives in the United States, regardless of citizenship status, for a significant portion of the calendar year.

Government Budget Deficit

The financial situation in which a government's expenditures exceed its revenues, leading to borrowing or reducing reserves.

Domestic Investment

The total capital expenditures for the acquisition, maintenance, or improvement of physical assets within a country's borders.