Reference no: EM132804259
Questions -
Q1. A company received a bank statement at the end of the month. The statement contained these items.
Bank service charge for the month: $300
Interest earned and added by the bank to the account: $100
Ending balance (reflects interest and bank service charge): $5,000
In comparing the bank statement to its own cash records, the controller of the company found these items.
Deposits made but not yet recorded by the bank: $3,000
Checks written and mailed but not yet recorded by the bank: $4,000
Before making any adjustment suggested by the bank statement, the cash balance according to the company's books is $4,200.
What is the correct adjusted general ledger balance as of the end of the month?
A. $4,800
B. $4,200
C. $5,000
D. $4,000
Q2. A company rents a building that it uses in its operations. The accountant for the company mistakenly input a $1,000 rental payment on the building as $100 in the accounting records. What is the impact of this error on the financial statements?
A. Expenses are too low, so reported net income is too high.
B. Revenues are too low, so reported net income is too low.
C. Expenses are too high, so reported net income is too low.
D. Revenues are too high, so reported net income is too high.