Question
Prana, after transferring her data from the journal to create a general ledger, notices that the debits are larger than the credits in her cash account and so the two don't balance. What is likely to have happened?
Question 12 options:
It's ok if they don't balance; nothing happened.
She likely made a mistake in the transfer of information from the journal.
She forgot to add a transaction when she received cash for a sale.
She forgot to add a transaction where she spent cash for a purchase.
Question 12 options:
It's ok if they don't balance; nothing happened.
She likely made a mistake in the transfer of information from the journal.
She forgot to add a transaction when she received cash for a sale.
She forgot to add a transaction where she spent cash for a purchase.
Answers
GPT-4o mini
In this situation where the debits in the cash account are larger than the credits, the most likely explanation is:
**She forgot to add a transaction where she spent cash for a purchase.**
This is because if debits (cash received) exceed credits (cash spent), it typically indicates that all cash inflows were recorded, but not all cash outflows were accounted for. Therefore, the cash account would show a higher amount for debits than credits.
The other options are less likely:
- It's not okay for them not to balance; a balancing of debits and credits is critical in accounting.
- A mistake in transferring information could be possible, but given that debits exceed credits, the more probable reason is the missing expense entry.
- Forgetting to add a transaction for revenue received (credit) would not lead to a scenario where debits exceed credits; instead, it would cause debits to balance out or potentially remain balanced.
Thus, the most accurate answer is that Prana likely forgot to account for a transaction where she spent cash for a purchase.
**She forgot to add a transaction where she spent cash for a purchase.**
This is because if debits (cash received) exceed credits (cash spent), it typically indicates that all cash inflows were recorded, but not all cash outflows were accounted for. Therefore, the cash account would show a higher amount for debits than credits.
The other options are less likely:
- It's not okay for them not to balance; a balancing of debits and credits is critical in accounting.
- A mistake in transferring information could be possible, but given that debits exceed credits, the more probable reason is the missing expense entry.
- Forgetting to add a transaction for revenue received (credit) would not lead to a scenario where debits exceed credits; instead, it would cause debits to balance out or potentially remain balanced.
Thus, the most accurate answer is that Prana likely forgot to account for a transaction where she spent cash for a purchase.