While performing its monthly bank reconciliation, the bookkeeper for the Gee Corporation noted that a deposit of $900 (received from a customer on account) was recorded in the company books as $990. Which of the following shows the effect of the correcting entry on the financial statements?
A)Option A
B)Option B
C)Option C
D)Option D

Question

While performing its monthly bank reconciliation, the bookkeeper for the Gee Corporation noted that a deposit of $900 (received from a customer on account) was recorded in the company books as $990. Which of the following shows the effect of the correcting entry on the financial statements? 
A)Option A 
B)Option B 
C)Option C 
D)Option D

Quizplus · Accepted Answer

The error overstated cash and understated accounts receivable. Therefore, the entry to correct the error will increase accounts receivable (an asset) and decrease cash (an asset). It will also be reported as a cash outflow for operating activities.

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