A company neglected to record services provided on credit.What would be the effect of this omission?
A)Liabilities would be overstated and revenues would be understated.
B)Assets and revenues would be understated.
C)Assets would be overstated and revenues would be understated.
D)Liabilities and revenues would be understated.

Question

Quizplus · Accepted Answer

The transaction increased Accounts Receivable and Service Revenues.The failure to the transaction would then understate Accounts Receivable (an asset account)and understate Service Revenues (a revenue account).

A Company Neglected to Record Services Provided on Credit