Just before preparing financial statements, an inexperienced accountant recorded the use of supplies by debiting supplies expense $100 and debiting supplies $100.Which of the following is most true?
A)The transaction was recorded correctly.
B)The unadjusted trial balance will be an effective internal control for detecting any error.
C)The adjusted trial balance will be an effective internal control for detecting any error.
D)Sequential transaction numbering will be an effective internal control for detecting any error.

Question

Quizplus · Accepted Answer

Recording the use of supplies by debiting supplies expense $100 and debiting supplies $100 is an error of double counting. The corrected entry would be a debit to supplies expense $100 and a credit to supplies $100. This error will be corrected when adjusting entries are made and the adjusted trial balance will catch the error. The unadjusted trial balance will not be an effective internal control as it will include the erroneous entries. Sequential transaction numbering is not relevant to detecting this type of error.

Just Before Preparing Financial Statements, an Inexperienced Accountant Recorded the Use