Income Statement Total Expenses Statement of Financial Posit

Income Statement Total Expenses Statement of Financial Position (A=L+SE) Total Liabilities Shareholders Equity Error Total Revenue Net Profit Total Assets (a) Made a payment for general repairs to the building but mistakenly debited the Buildings (asset) account Recorded the collection of an account receivable by debiting Cash and crediting a revenue account (b) (c) Correctly recorded revenue earned on account, however, the accounting supervisor did not realize that you have already recorded the transaction and recorded it again No Effect Understated Overstated (d) Recorded the purchase of a new truck as a debit to Truck Expense and a credit to Cash (e) Recorded cash payment for utilities by debiting Repairs Expense and crediting Accounts Payable

Solution

Total Revenue Total expenses Net profit Total assets Total liabilities Shareholders\' equity a) Made a payment…………………………………….. No effect Understated Overstated Overstated No effect Overstated b) Recorded the collection………………………….. Overstated No effect Overstated Overstated No effect Overstated c) Correctly recorded revenue earned on…….. Overstated No effect Overstated Overstated No effect Overstated d) Recorded the purchase of a new truck No effect Overstated Overstated Understated No effect Understated e) Recorded cash payment for …………………….. No effect No effect Net profit Overstated Overstated No effect