The new bookkeeper forgot to record the sale of merchandise that was made to a customer on account with 20% profit. What impact does this have on the company’s books? Cash is understated/Accounts receivable is understated/Inventory is overstated/Income statement is understated Accounts receivable is understated/Inventory is understated/Income statement is overstated Cash is overstated/Inventory is understated/Income statement is overstated Accounts receivable is understated/Inventory is overstated/Income statement is understated Cash is understated/Accounts receivable is overstated/Income statement is understated
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
The new bookkeeper forgot to record the sale of merchandise that was made to a customer on account with 20% profit. What impact does this have on the company’s books?
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Cash is understated/ |
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Accounts receivable is understated/Inventory is understated/Income statement is overstated |
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Cash is overstated/Inventory is understated/Income statement is overstated |
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Accounts receivable is understated/Inventory is overstated/Income statement is understated |
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Cash is understated/Accounts receivable is overstated/Income statement is understated |
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