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Lady bird [3.3K]
3 years ago
9

After preparing its financial statements for June, Pinnacle Corporation realizes that its income statement shows total revenues

that are $500 too high and total expenses that are $500 too low. What effect will these errors have on Pinnacle’s balance sheet for the month, assuming all other account balances listed on that sheet are correct?
Business
1 answer:
solniwko [45]3 years ago
6 0

Answer:

The answer is: The total liabilities and equity will be $1,000 higher than the total assets amount, so the balance sheet will not be balanced.

Explanation:

If the income statement overstated revenue by $500 and understated expenses by $500, that will result in $1,000 in "fake" profit. If profit is overstated by $1,000 then the balance sheet will also be altered. The total liabilities and equity will be $1,000 higher than the total assets amount. The balance sheet will not be balanced.

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