However, liabilities (notes payable) is understated by $300,000, and owner’s equity is overstated by $300,000. The understatement of liabilities is offset by the overstatement of owner’s equity, and, thus, total liabilities and owner’s equity is correct. 10. a. From the viewpoint of Surety Storage, the balance of the checking account represents an asset. b. From the viewpoint of Ada Savings Bank, the balance of the checking account represents a liability. Practice Exercises: PE 2–1A 1. Debit and…
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