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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

A $15 credit to revenue was mistakenly posted as a $150 credit. By what amount is the revenue account in error?

$165 overstated

$135 understated

$150 understated

$135 overstated

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Verified step by step guidance

Step 1: Understand the problem. A $15 credit to revenue was mistakenly posted as a $150 credit. This means the revenue account was credited $135 more than it should have been.

Step 2: Calculate the difference between the correct amount ($15) and the incorrect amount ($150). Use the formula: $ \text{Error Amount} = \text{Incorrect Amount} - \text{Correct Amount} $.

Step 3: Substitute the values into the formula: $ \text{Error Amount} = 150 - 15 $.

Step 4: Recognize that the revenue account is overstated because the incorrect posting increased the revenue account by $135 more than it should have.

Step 5: Conclude that the revenue account is overstated by $135, as the error caused an excess credit to the account.