Failure to record amounts earned for services provided to customers but not yet paid results in which of the following

Question

Quizplus · Accepted Answer

Failing to record earned revenues that have not yet been paid results in revenues being understated, which in turn causes net income and therefore stockholders' equity to be understated. Since the revenue would increase accounts receivable (an asset), not recording it also means total assets are understated.

Failure to Record Amounts Earned for Services Provided to Customers