Question

Determine by how much, if at all, the adjusted trial balance will be incorrect due to the following independent errors.

a. An adjusting entry for prepaid insurance debited the insurance payable account for $1,200 and credited the prepaid insurance account for $1,200.
b. A journal entry debited the utilities expense account for $800 and credited the cash account for $700.
c. While recording the accrued interest revenue, the accountant debited the interest receivable account for $300 and credited the interest revenue account for $30.

a. By how much will the adjusted trial balance be incorrect due to the error in the adjusting entry for prepaid insurance?
1. $1,200
2. $0
3. $2,400
4. Cannot be determined

b. By how much will the adjusted trial balance be incorrect due to the error in the journal entry for utilities expense?
1. $100
2. $200
3. $300
4. Cannot be determined

c. By how much will the adjusted trial balance be incorrect due to the error in recording the accrued interest revenue?
1. $270
2. $270
3. $330
4. Cannot be determined

Answer 1

The impact of the error on the adjusted trial balance cannot be determined without specific information about the error in question. For other numerical calculations, the results are 30.11% and -2.38% for dividing the given billion dollar figures. In terms of economic concepts, the current account balance is broader than the trade balance, as it includes investment money flows in addition to the trade surplus or deficit.

Step-by-step explanation:

The question asks to determine by how much the adjusted trial balance will be incorrect due to an error in the journal entry for utilities expense. The information needed to answer this question is incomplete since the error in the utilities expense entry is not specified. Therefore, it's not possible to quantify the inaccuracy without additional information. A trial balance may be incorrect due to various types of errors such as omission, commission, principle, or compensating errors. The impact of the error on the trial balance would depend on the nature and size of the error.

To answer questions 5 and 6, we must divide the given numbers. For question 5, dividing $542 billion by $1,800 billion, we get approximately 0.3011 or 30.11%. For question 6, dividing -$400 billion by $16,800 billion gives us approximately -0.0238 or -2.38%.

As for question 7, understanding the current account balance and trade balance is important in economics and international finance. The trade balance reflects the difference between a country's exports and imports, while the current account balance includes the trade balance and also captures international money flows from investments.