Effects of errors on financial statements:
Indicate the immediate effect of the following errors on each of the accounting elements described in the column heading below, using the following code:
O = Overstated, U= Understated; NE = No Effect.
|
Error
|
Total Revenue
|
Total Expenses
|
Net Income
|
Total Assets
|
Total Liability
|
Owner Equity
|
|
Received $500 cash for services rendered to a customer, but recorded the transaction as $50
|
U
|
NE
|
U
|
U
|
NE
|
U
|
|
a. Recorded twice a sale of services to a customer
|
|
|
|
|
|
|
|
B .Recorded the purchase of office equipment on account as a debit to office Equipment and a credit to Account Receivable
|
|
|
|
|
|
|
|
c. Failed to record interest accrued at end of period of note payable
|
|
|
|
|
|
|
|
d. Recorded collection of account receivable by debit to cash and credit to revenue
|
|
|
|
|
|
|