Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

2. Transaction Analysis

Journal Entries: Debits and Credits

Financial Accounting

2. Transaction Analysis

Journal Entries: Debits and Credits

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Multiple Choice

Which of the following lists the correct three steps for correcting an incorrect amount posted to an account?

Ignore the error if it is immaterial, adjust the balance at year-end, and document the change.

Draw a line through the incorrect amount, write the correct amount above it, and initial the correction.

Delete the entire journal entry, re-enter the transaction, and file a correction report.

Erase the incorrect amount, write the correct amount, and notify the supervisor.

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Verified step by step guidance

Step 1: Understand the context of the problem, which involves correcting an incorrect amount posted to an account. This is a common scenario in financial accounting where accuracy is critical.

Step 2: Review the options provided in the problem. Each option suggests a different method for correcting the error. Analyze the implications and appropriateness of each method based on accounting principles.

Step 3: Recall the standard procedure for correcting errors in accounting records. The correct approach typically involves drawing a line through the incorrect amount, writing the correct amount above it, and initialing the correction. This ensures transparency and accountability.

Step 4: Compare the correct procedure to the options provided in the problem. Identify the option that matches the standard accounting practice for error correction.

Step 5: Confirm that the selected option aligns with ethical and professional accounting standards, ensuring the correction is properly documented and traceable.