Question

Which of the following is an example of misappropriation of assets resulting in a misstatement in the balance sheet?

A. Cash from a cash sale was stolen and the transaction was not recorded.
B. Assets were stolen and the misappropriation was discovered.
C. Cash collected from a customer was stolen and the account receivable for the customer's account was not credited.
D. Both A and C

Answer 1

The misappropriation of assets resulting in a misstatement in the balance sheet is exemplified by both options A and C.

Step-by-step explanation:

The correct answer is D. Both A and C.

Misappropriation of assets refers to the unauthorized use or theft of a company's assets. In option A, cash from a cash sale was stolen and not recorded, resulting in a misstatement in the balance sheet. This is an example of misappropriation of assets that affects the accuracy of the balance sheet. Similarly, in option C, cash collected from a customer was stolen, and the accounts receivable for the customer's account was not credited. This also leads to a misstatement in the balance sheet.