While performing its monthly bank reconciliation, the bookkeeper for Grace Corporation noted that a deposit of $990 (received from a customer on account)was recorded in the company books as $900. Which of the following shows the effect of correcting the error on the financial statements?

Question

Quizplus · Accepted Answer

The correction of the error will increase both the cash balance and accounts receivable balance by $90. So, the correct answer would be Option C as it shows an increase of $90 in both cash and accounts receivable. This will increase the total assets by $90 and have no effect on the liabilities or equity, so both of them remain the same. Therefore, the correct option is C.

While Performing Its Monthly Bank Reconciliation, the Bookkeeper for Grace