If a $200 Debit to Interest Receivable Was Instead Recorded

question 8

Multiple Choice

If a $200 debit to Interest Receivable was instead recorded as a $200 debit to Cash:

• A)the trial balance would be out of balance by $200.
• B)cash flows from investing activities would be overstated by $200.
• C)cash flows from operating activities would be overstated by $200.
• D)assets would be overstated by $200.

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Definitions:

Earnings After Tax

The net income a company retains after deducting all its expenses, including taxes, highlighting its profitability.

Deferred Taxes

Taxes owed that are not paid at the current time but are instead deferred to be paid in the future.

Net Cash Flow

The variation in cash earnings versus expenditures for a business during a certain period.

Debt Ratio

A financial ratio that measures the extent of a company's leverage, calculated by dividing total liabilities by total assets.