A credit to an asset account was posted to a liability account. This would cause
A) assets to be understated.
B) liabilities to be overstated.
C) capital to be overstated.
D) revenue to be overstated.

Question

Quizplus · Accepted Answer

A credit to an asset account increases the balance of the asset account, but a credit to a liability account increases the balance of the liability account. Therefore, if a credit was posted to a liability account instead of the intended asset account, the liability account would be overstated.

A Credit to an Asset Account Was Posted to a Liability