Asked by Abagail Marie Minnick on Jul 25, 2024
Verified
A debit to an asset account was posted as a debit to an expense account. This error would cause:
A) liabilities to be overstated.
B) expenses to be overstated.
C) assets to be understated.
D) Both B and C are correct.
Expense Account
An account that tracks money spent on business operations, often categorized for budgeting and tax purposes.
Asset Account
An account that represents resources owned or controlled by a company from which future economic benefits are expected.
Liabilities
Financial obligations or debts that a company owes to others, which must be paid back in the future.
- Detect and correct ordinary accounting faults and comprehend their repercussions on financial records.
Verified Answer
PB
Payton BatchelderJul 29, 2024
Final Answer :
D
Explanation :
Debiting an expense account instead of an asset account overstates expenses and understates assets, as the expense increases and the asset does not increase as it should.
Learning Objectives
- Detect and correct ordinary accounting faults and comprehend their repercussions on financial records.