Recording revenues early overstates current-period income; recording revenues late understates current period income.

Question

Quizplus · Accepted Answer

Recording revenues early means recognizing revenue before it is earned or before it is certain it will be earned, which overstates current-period income. On the other hand, recording revenues late means recognizing revenue after it was earned, which understates current-period income. Therefore, the statement is true.

Recording Revenues Early Overstates Current-Period Income; Recording Revenues Late Understates