A credit to a liability account was posted to an owner's equity account. This would cause __________.
A. assets to be overstated
B. liabilities to be understated
C. owner's equity to be understated
D. net income to be overstated
i think its D
A credit to an asset account was posted to an expense account. This would cause __________.
A. assets to be overstated
B. liabilities to be understated
C. capital to be understated
D. expenses to be overstated
i think its D
For the first question:
To determine the correct answer, let's analyze the situation. A credit to a liability account means that an amount was posted as a decrease in a liability, which typically involves reducing a debt or obligation. However, instead of reducing the liability, it was posted as an increase in the owner's equity account.
The correct answer is C. owner's equity to be understated.
To understand why, it's important to know that the owner's equity represents the owner's or shareholders' interest in the assets of the company. When a credit is posted to a liability account mistakenly in the owner's equity account, it would reduce the amount of the liability, which means the total owner's equity would become lower than it should be. Therefore, owner's equity is understated.
For the second question:
In this scenario, a credit was posted to an asset account, which means that an amount was recorded as a decrease in an asset. However, it was mistakenly posted as an increase in an expense account.
The correct answer is D. expenses to be overstated.
Expenses are costs incurred by a company to generate revenue, and they are recorded as debits. However, when a credit is posted to an expense account, it would be recorded as an increase in expenses, making them appear higher than they actually are. This would cause expenses to be overstated.
Remember, these explanations are based on the general understanding of accounting principles. Always consult with a professional accountant or refer to specific accounting guidelines for accurate information applicable to a particular situation.
For the first question, the correct answer is C. Owner's equity to be understated.
When a credit is posted to a liability account instead of an owner's equity account, it means that an amount that should have been added to the owner's equity account has been incorrectly added to a liability account. This results in a decrease in owner's equity, leading to an understatement.
For the second question, the correct answer is D. Expenses to be overstated.
When a credit is posted to an asset account instead of an expense account, it means that an amount that should have been subtracted from an asset account has been incorrectly added to the expense account. This results in an increase in expenses, leading to an overstatement.