If a company records a transaction with wrong amounts but properly debits and credits affected accounts, or posts correct numbers towrong accountsthe accounting equation will be satisfied but the financial statements will be incorrect.there will be no effect on the financial statements.the financial statements will be correct.the accounting equation will not balance but the financial statements will be correct..

As per accounting Equation the Total assets = Total liabilities + Equity

Answered: If a company records a transaction with…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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{Auditing} 15. Find the nature of materiality if the client incorrectly selects and applies accounting policy which has negligible effect in the current period but has significant effect on the future period. a. Material by nature b. None of the options c. Materiality by the amount for financial statements as a whole d. Either materiality by amount or materiality by nature
9. Technical analysts feel that financial accounting statements lack information, or report it in a way that makes comparisons difficult. Which of the following does not constitute a problem? a. Detailed information concerning sales and expenses by product line. b. Statements of change in financial position. c. Alternative ways of reporting expenses. d. Alternative ways of reporting assets and liabilities. e. The availability of psychological and nonquantitative variables.
Accounting data does not consider off-balance sheet items, such as unused commitments of a firm. O True O False
Which one of the following statements is not correct regarding financial accounting and management accounting? O a. Financial accounting reports need to be audited to verify their accuracy unlike management accounting reports which do not need to be audited. O b. Only financial accounting involves the use of accounting information. Management accounting information emphasize supporting decisions that affect the future unlike financial accounting information, which focus on the consequences of past activities of the organization. O c. O d. None of the given answers Financial accounting needs to follow specific set of rules called accounting standards unlike management accounting O e.
The new bookkeeper forgot to record the payment of an accounts payable to a supplier. What impact does this have on the company’s books? No effect Cash is understated/the Income Statement is understated Cash is overstated/the Income Statement is overstated Cash is overstated/liabilities are understated Cash is overstated/liabilities are overstated
A trial balance does not balance. The owner believes the following mistakes WOULD cause animbalance. Do you agree? (Answer TRUE or FALSE for each statement) A. The owner forgot to record a cash saleB. A credit sale was recorded as a debit to sales and a debit to trade receivablesC. When transferring the bank overdraft from the Cash T account it was entered on thedebit side of the trial balanceD. Rates expense of £500 was debited to rent expenses and credited to cashE. A payment to a supplier of £690 was entered to cash as £690 but to trade payables as£609

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