Question

Quickbooks

An accountant is reviewing a trial balance. She knows the Accounts Receivable balance, on the Trial Balance, should be $350. However, the Trial Balance she is reviewing states the Accounts Receivable balance is $300. The balance is understated. Which of the following might be the cause of the error? Choose all that apply. Group of answer choices

1)The accountant created an invoice twice.

2)The accountant didn't create an Invoice that should have been created.

3)The accountant paid a bill twice.

4)The accountant created an invoice for the wrong amount.

Assuming Accounts Receivable is understated by $50, what will be the effect of the error on other general ledger accounts?Group of answer choices

A)Cash will be understated.

B)Revenue will be understated.

C)Revenue will be overstated.

D)Accounts Payable will be understated.

Answer 1

The correct answer will be option (2) and option (4). It is because if an accountant doesn't create an invoice that should have been created then the value of accounts receivable will be understated. If the accountant created an invoice for the wrong amount then also the value of accounts receivable will be understated when the amount of invoice is lower than value that should have been there. The other options are not the reason for understatement of accounts receivable.