The receipt of $8,000 cash for fees earned was recorded by Mother Earth Consulting as an increase in cash of $8,000 and a decrease in retained earnings (revenue) of $8,000. What is the effect of this error on the accounting equation? A. Total assets will exceed total liabilities and stockholders’ equity by $8,000 B. Total assets will be less than total liabilities and stockholders’ equity by $8,000 C. Total assets will exceed total liabilities and stockholders’ equity by $16,000 D. The error will not affect the accounting equation.
The receipt of $8,000 cash for fees earned was recorded by Mother Earth Consulting as an increase in cash of $8,000 and a decrease in retained earnings (revenue) of $8,000. What is the effect of this error on the accounting equation? A. Total assets will exceed total liabilities and stockholders’ equity by $8,000 B. Total assets will be less than total liabilities and stockholders’ equity by $8,000 C. Total assets will exceed total liabilities and stockholders’ equity by $16,000 D. The error will not affect the accounting equation.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The receipt of $8,000 cash for fees earned was recorded by Mother Earth Consulting as an increase in cash of $8,000 and a decrease in
A. Total assets will exceed total liabilities and
B. Total assets will be less than total liabilities and stockholders’ equity by $8,000
C. Total assets will exceed total liabilities and stockholders’ equity by $16,000
D. The error will not affect the accounting equation.
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