An incorrect debit to Accounts Receivable instead of the correct account Notes Receivable does NOT require a correcting entry because total assets will NOT be misstated.

Question

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If an incorrect debit is made to Accounts Receivable instead of Notes Receivable, it will result in an overstatement of Accounts Receivable and an understatement of Notes Receivable. This means that total assets will be misstated, and a correcting entry will be required to ensure that the financial statements are accurate.

An Incorrect Debit to Accounts Receivable Instead of the Correct