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25 July, 09:14

1. On December 31st, 2012, Bingo Corp. borrowed $50,000 from a bank. Half of the loan was to be repaid in 2013, and the other half in 2014. This entry was never recorded. The effect of this error in the financial statements for the fiscal year end 2012 was:

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  1. 25 July, 09:16
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    undervalued assets an liabilities by 50,000

    Explanation:

    The financial statement for the fiscal year ended on December 31th, 2012

    will have the following mistake:

    Liabilities are undervalued by 50,000

    Cash wll be undervalued by 50,000

    As the note payable is not recorded neither the cash receipts from the loan.

    Because this transaction is missing, we are not doing a correct representation of reality. This account will be undervalued.
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