While performing its monthly bank reconciliation, the bookkeeper for the Mosaic Company discovered that a check written for $421 for advertising expense was recorded in the firm's books as $241. Which of the following shows the effect of the correcting entry on the financial statements?

Question

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The error that recorded the check for less than it should have been understated advertising expense and overstated cash by the difference, $180. The correcting entry will decrease cash and increase expense, which decreases net income and equity. It is reported on the statement of cash flows as a cash outflow for operating activities.

While Performing Its Monthly Bank Reconciliation, the Bookkeeper for the Mosaic