A credit to an asset account was posted to a liability account. This would cause:
A) assets to be overstated.
B) liabilities to be understated.
C) capital to be understated.
D) revenue to be overstated.

Question

Quizplus · Accepted Answer

When a credit that should have been posted to an asset account is mistakenly posted to a liability account, it reduces the asset balance and increases the liability balance. Since the asset should have been credited (increased), but instead a liability was credited (also increased), it results in assets being reported as less than they actually are, hence overstated.

A Credit to an Asset Account Was Posted to a Liability