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Homework answers / question archive / In reviewing the accounts of Tumblers 00, you discovered that a credit of $1,000 to prepaid insurance was wrongly credited to accounts receivable, and an $800 prepayment was remitted for a radio advertisement that was not posted

In reviewing the accounts of Tumblers 00, you discovered that a credit of $1,000 to prepaid insurance was wrongly credited to accounts receivable, and an $800 prepayment was remitted for a radio advertisement that was not posted

Accounting

In reviewing the accounts of Tumblers 00, you discovered that a credit of $1,000 to prepaid insurance was wrongly credited to accounts receivable, and an $800 prepayment was remitted for a radio advertisement that was not posted.

Which of the following statements reflects the effect of the errors?

a) Total assets is understated by $200 and owner's equity is understated by $200.

b) There is no overstatement or understatement in the total assets and the owner's equity.

c) Total assets are overstated by S500 and the owner's equity is overstated by $500.

d) Total assets are understated by $1,800, and owner's equity is understated by $1000.

e) Total assets are overstated by $300 and owner's equity is overstated by $300.

Option 1

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