Asked by Elizabeth Carney on Jun 05, 2024
Verified
An accountant has debited an asset account for $1300 and credited a liability account for $600. Which of the following would be an incorrect way to complete the recording of the transaction?
A) Credit an asset account for $700.
B) Credit another liability account for $700.
C) Credit an owner's equity account for $700.
D) Debit an owner's equity account for $700.
Asset Account
A category within the general ledger that reports the value of a company's assets such as cash, equipment, and property.
Liability Account
An accounting record that reports the amounts a company owes to creditors and other parties, often categorized as current or long-term.
Owner's Equity Account
Represents the total amount of capital the owner has in a business after liabilities have been subtracted from assets.
- Implement knowledge of accounting principles to accurately classify transactions.
- Assess the thoroughness and precision of financial records.
Verified Answer
BG
Brittany GregoryJun 07, 2024
Final Answer :
D
Explanation :
Option A is correct as it balances the transaction by crediting an asset account.
Option B is correct as it balances the transaction by crediting another liability account.
Option C is correct as it balances the transaction by crediting an owner's equity account.
Option D is incorrect as it would increase the owner's equity account, which is not affected by the original transaction.
Option B is correct as it balances the transaction by crediting another liability account.
Option C is correct as it balances the transaction by crediting an owner's equity account.
Option D is incorrect as it would increase the owner's equity account, which is not affected by the original transaction.
Learning Objectives
- Implement knowledge of accounting principles to accurately classify transactions.
- Assess the thoroughness and precision of financial records.