Question

Select all that apply. The accountant for Harper Plumbing Company failed to record the following transaction in the journal: Billed customers $1,400 for services performed. Select the two of the following that will be errors resulting from this omission. A : Net income will be understated. B : Assets will be overstated on the balance sheet. C : The ledger will not balance. D : Net income will be overstated. E : The journal will not balance. F : Assets will be understated on the balance sheet.

Answer 1

Answer:

A : Net income will be understated and

F. Assets will be understated on the balance sheet.

Explanation:

'Billed customers $1,400 for services performed' will be journalised as:

Cash A/c Dr to Sale/Income A/c Cr.

So; Not recording this transaction will understate the income & asset i.e cash. Income will be understated in the P&L A/C, assets will be understated in the Balance Sheet.

Other options are inapt because: Assets & Income overstatement are opposites of correct answer. Journal & ledger will be balanced because the entire entry is not recorded & its both debit & credit aspects have been omitted.