The collection on account within the 2/10 n/30 discount period was recorded using a 10% discount rather than a 2% discount in both the controlling and subsidiary accounts. This error will cause
A) the net income for the period to be understated.
B) the net income for the period to be overstated.
C) the control account to not agree with the subsidiary ledger.
D) the assets to be overstated.

Question

Quizplus · Accepted Answer

The error results in recognizing a larger discount than actually given, reducing revenue and thus understating net income.

The Collection on Account Within the 2/10 N/30 Discount Period