If fictitious credit sales were recorded and the fictitious accounts receivable were later directly 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

Recording fictitious credit sales initially overstates income, but directly writing off the fictitious accounts receivable as bad debt expense later corrects the overstatement, resulting in no net misstatement of income.

If Fictitious Credit Sales Were Recorded and the Fictitious Accounts