Answered: If furniture is overvalued by P1,000 in…

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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If furniture is overvalued by P1,000 in the trial balance, ----------.

a. the total debit balance is greater than the total credit balance in the trial balance

b. the total debit balance is smaller than the total credit balance in the trial balance

c. the total debit balance is the same as the total credit balance in the trial balance

d. the value of assets on the credit side of the trial balance should be reduced

If the debit side of the trial balance is undervalued by P2,000 with the correct debit balance, which of the following are not the possible reasons? 1. The cash payment for the electricity bill of P2,000 is recorded as the payment for rates in the ledgers. 2. The transaction regarding the settlement of debt by Mr. Lee by cash of P2,000 in the ledger accounts is completely omitted. 3. The receipt of income in cash of P1,000 is recorded in the cash book as a payment by cash of P1,000, while the entry in the income account is made correctly.

a. (1) and (2) only

b. (1) and (3) only

c. (2) and (3) only

d. (1), (2) and (3)

Definition Definition Financial journal in which only cash-related transactions are recorded. Cash transactions are posted chronologically in the cash book, which is also called a subsidiary book. All the cash receipts are recorded on the debit side and all the cash payments are recorded on the credit side. An important point to remember is that the cash book never shows a credit balance; only a debit balance is shown in the cash book.

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