Which of the following lists the correct three steps for correcting an incorrect amount posted to an account?

• A. Ignore the error if it is immaterial, adjust the balance at year-end, and document the change.
• B. Draw a line through the incorrect amount, write the correct amount above it, and initial the correction.
• C. Delete the entire journal entry, re-enter the transaction, and file a correction report.
• D. Erase the incorrect amount, write the correct amount, and notify the supervisor.

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the context of the problem, which involves correcting an incorrect amount posted to an account. This is a common scenario in financial accounting where accuracy is critical.
2. Step 2: Review the options provided in the problem. Each option suggests a different method for correcting the error. Analyze the implications and appropriateness of each method based on accounting principles.
3. Step 3: Recall the standard procedure for correcting errors in accounting records. The correct approach typically involves drawing a line through the incorrect amount, writing the correct amount above it, and initialing the correction. This ensures transparency and accountability.
4. Step 4: Compare the correct procedure to the options provided in the problem. Identify the option that matches the standard accounting practice for error correction.
5. Step 5: Confirm that the selected option aligns with ethical and professional accounting standards, ensuring the correction is properly documented and traceable.