Identify the effect (a through h) that omitting each of the following items would have on the balance sheet.
-Interest earned on a note receivable was not recorded.
A)Assets and owner's equity overstated
B)Assets and owner's equity understated
C)Assets overstated and owner's equity understated
D)Assets understated and owner's equity overstated
E)Liabilities and owner's equity overstated
F)Liabilities and owner's equity understated
G)Liabilities overstated and owner's equity understated
H)Liabilities understated and owner's equity overstated

Question

Quizplus · Accepted Answer

By not recording the interest earned on a note receivable, both the asset (note receivable) and owner's equity (interest revenue) will be understated. This will result in an understated total assets and owner's equity on the balance sheet.

Identify the Effect (A Through H) That Omitting Each of the Following