BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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An error in posting may cause
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income to be overstated or understated on the income statement
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a business to pay too much to a vendor
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cash on hand to be less than the balance in the cash account
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all of these
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Explanation:
Detailed explanation-1: -An error in posting may cause: income to be overstated or understated on the income statement (by overstating or understating expenses or revenue). a business to pay too much to a vendor (by overstating accounts payable). cash on hand to be less than the balance in the cash account.
Detailed explanation-2: -an error made while carrying over an entry from a journal to a ledger.
Detailed explanation-3: -Error of principle is recording an item that does not comport with Generally Accepted Accounting Principles (GAAP). Usually, this happens when an entry is made in the wrong account. The amount is correct but is simply entered in the wrong place.
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