Two months before year-end, the bookkeeper erroneously recorded the receipt of a long-term bank loan by a debit to cash and a credit to sales. Which of the following is the most effective procedure for detecting this type of error?
A)Analysis of the notes payable journal.
B)Analysis of bank confirmation information.
C)Preparation of a year-end bank reconciliation.
D)Preparation of a year-end bank transfer schedule.

Question

Quizplus · Accepted Answer

Bank confirmation information would reveal the existence of the loan, which would not match the sales account, thus detecting the error.

Two Months Before Year-End, the Bookkeeper Erroneously Recorded the Receipt