Ask Question
17 May, 16:00

The entry to record the issuance of a note for cash was recorded with a debit to Cash and a credit to Notes Receivable. The effect of recording this entry causes: Select one: A. stockholders' equity to be understated. B. assets to be understated. C. liabilities to be overstated. D. stockholders' equity to be overstated.

+3
Answers (1)
  1. 17 May, 19:42
    0
    B) assets to be understated.

    Explanation:

    The correct journal entry should have been:

    Dr Cash XX

    Cr Notes payable XX

    Instead, the following entry was made:

    Dr Cash XX

    Cr Notes receivable XX

    Since notes receivable is an asset and it is wrongfully decreased, assets will be understated. Since notes payable is a liability and it is not recorded. liabilities will also be understated.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “The entry to record the issuance of a note for cash was recorded with a debit to Cash and a credit to Notes Receivable. The effect of ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers