The sale of common stock was recorded as a sale of preferred stock.This error would cause:

Question

Quizplus · Accepted Answer

Recording the sale of common stock as preferred stock does not affect the total amount of stockholders' equity, as both types of stock are equity accounts. The error would misclassify the type of equity but not change the total equity amount, thus not affecting the period's net income or the overall size of stockholders' equity.

The Sale of Common Stock Was Recorded as a Sale