Recognizing a loan received as revenue instead of as a liability has a positive effect on the reported financial statements for all of the following except:
A) It understates liabilities.
B) It overstates revenues.
C) It overstates net income.
D) It overstates assets.

Question

Quizplus · Accepted Answer

Recognizing a loan as revenue does not affect assets; it affects liabilities and income statement accounts.

Recognizing a Loan Received as Revenue Instead of as a Liability