Providing services to a credit customer was recorded with a debit to Cash and a credit to Retained Earnings.This error would cause:

Question

Quizplus · Accepted Answer

The error would cause the period's net income to be understated because the revenue was not recorded in the revenue account, which affects the income statement. Instead, it was incorrectly credited to Retained Earnings, bypassing the income statement entirely.

Providing Services to a Credit Customer Was Recorded with a Debit