What action should be taken if a numerical error is found in the cash account?

When a numerical error is discovered in the cash account, the appropriate action is to adjust the cash account accurately. If there has been an overstatement of cash (i.e., too much cash was recorded than actually exists), you would need to deduct the erroneous amount to reflect the true cash balance. If the error indicates that cash is understated (i.e., more cash should have been recorded), then the correct course of action is to add the amount to the cash account.

In the context of the answer choice provided, if the situation required adding an amount to correct an underreported cash balance, then that response would be justified. However, careful consideration must be given to the nature of the error. Therefore, the adjustment process hinges on whether the error reflects an amount that should have been included (requiring an addition) or something that was incorrectly recorded and thus should be subtracted.

Simply ignoring the error could lead to significant discrepancies in financial reporting, which can obscure the organization’s true financial position. Likewise, adjusting based solely on company deposits without addressing the specific error would not reliably correct the underlying issue in the financial records. Adjustments should be made based on the actual nature of the discovered error to ensure accuracy in the financial statements.