If sales were overstated by recording a false credit sale at the end of the year,where could you find the false "dangling debit"?
A) Inventory.
B) Cost of goods sold.
C) Bad debt expense.
D) Accounts receivable.

Question

Quizplus · Accepted Answer

The false credit sale would result in an increase in accounts receivable. The corresponding entry to the credit sale would be a debit to accounts receivable. Therefore, the false "dangling debit" could be found in the accounts receivable account.

If Sales Were Overstated by Recording a False Credit Sale