Accounting for IGCSE & O level - Accounting Procedures (Section 11 - No. 5)
How would the failure to record a cash payment for rent impact the accounting equation?
Assets would be overstated, and owner's equity would be understated.
Assets would be understated, and owner's equity would be overstated.
Assets would be overstated, and liabilities would be understated.
Liabilities would be overstated, and owner's equity would be understated.
Explanation
Failing to record the cash payment would inflate the cash (asset) balance and the profit (equity) by not recording the expense.
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