A debit to the capital account was posted to an expense account. This would cause __________.
A. assets to be overstated
B. liabilities to be understated
C. capital to be overstated
D. expense to be understated
i think its D
To determine the correct answer, let's break down the information provided in the question.
The question states that a debit was posted to the capital account, but it should have been posted to an expense account. In accounting, debits increase both assets and expenses, while credits decrease them. Since the debit was incorrectly posted to an expense account, it means that the expense account is being understated.
Now, we need to find the option that correctly describes the impact of this error.
A. Assets represent what a company owns, and this error does not directly relate to assets, so option A is not the correct choice.
B. Liabilities represent what a company owes, and this error does not directly relate to liabilities, so option B is not the correct choice.
C. Capital represents the owner's investment in the business, and this error does not directly relate to capital, so option C is not the correct choice.
D. Expenses are costs incurred by the business, and since the error caused the expense to be understated, option D is the correct choice.
Therefore, the correct answer is D. The debit to the capital account, posted to an expense account, would cause expenses to be understated.