Question

Declaration of a cash dividend was recorded by debiting Operations Expense and crediting Cash. This error would cause

A. the period's end assets to be overstated.
B. the period's end liabilities to be overstated.
C. the period's end stockholders' equity to be understated.
D. None of the above

Answer 1

I believe the answer is D. None of the Above

because the error would cause the period end net income to be understated.

Answer 2

The correct answer is A. The period's end assets to be overstated.

The error of cash dividend being recorded by debiting operations causes the period's end assets to be overstated.

The retained earning of a corporation get decreased if declared cash dividends which are on the stock and then the liabilities increase.

Payment of dividend and declaration, results that stockholders equity and assets they decrease.

Therefore, the retained earnings and balance sheet accounts also decreases.