Question

A firm recorded various transactions with the journal entries shown below. Using the notation O/S (overstated), U/S (understated), or No (no effect), indicate the effects on assets, liabilities, and shareholders’ equity of any errors in recording each of these transactions. For example, if a firm recorded the issue of $10,000 of common stock by debiting Cash and crediting Bonds Payable, the effects of the error are shown as follows:
■ Assets—No
■ Liabilities—O/S $10,000
■ Shareholders’ equity—U/S$10,000


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  • CreatedMarch 04, 2014
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