The purchase of land for $50,000 cash was incorrectly recorded as an increase in land and an increase in notes payable. Which of the following statements is correct? A. The accounting equation will not balance because cash is overstated by $50,000. B. The accounting equation will not balance because notes payable are overstated by $50,000. C. The accounting equation will not balance because assets will exceed liabilities by $50,000. D. Even though a recording error has been made, the accounting equation will balance.
The purchase of land for $50,000 cash was incorrectly recorded as an increase in land and an increase in notes payable. Which of the following statements is correct? A. The accounting equation will not balance because cash is overstated by $50,000. B. The accounting equation will not balance because notes payable are overstated by $50,000. C. The accounting equation will not balance because assets will exceed liabilities by $50,000. D. Even though a recording error has been made, the accounting equation will balance.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Topic Video
Question
The purchase of land for $50,000 cash was incorrectly recorded as an increase in land
and an increase in notes payable. Which of the following statements is correct?
A. The accounting equation will not balance because cash is overstated by $50,000.
B. The accounting equation will not balance because notes payable are overstated by $50,000.
C. The accounting equation will not balance because assets will exceed liabilities by $50,000.
D. Even though a recording error has been made, the accounting equation will balance.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education