If fictitious sales were recorded and the fictitious accounts receivable were written off as bad debt expense,
A)Income would be overstated.
B)Income would be understated.
C)Income would not be misstated.
D)Accounts receivable would be understated.

Question

Quizplus · Accepted Answer

Writing off fictitious accounts receivable as bad debt expense would offset the initial overstatement of income from recording fictitious sales, resulting in no net misstatement of income.

If Fictitious Sales Were Recorded and the Fictitious Accounts Receivable