A $200 credit to Interest Payable was instead recorded in error as a $200 credit to Cash in an adjusting entry,which has been posted to the ledger accounts.Which of the following is the result of this error?
A)The trial balance is out of balance by $200.
B)Total assets are understated by $200.
C)Net income is overstated by $200.
D)Total liabilities are overstated by $200.

Question

Quizplus · Accepted Answer

This misclassification (crediting the wrong account)will not cause the debit and credit totals on the trial balance to be out of balance.Crediting an asset (Cash)instead of crediting a liability (Interest Payable)would understate total assets and understate total liabilities.That error has no effect on net income.

A $200 Credit to Interest Payable Was Instead Recorded in Error