What is the effect of the following error? $360 was received on account from customer. The accountant debited cash for $360 and credited Professional Fees for $360.

Question

Quizplus · Accepted Answer

The effect of debiting cash and crediting professional fees for a payment received on account is that revenue is overstated. This is because the entry should have debited accounts receivable (an asset) and credited revenue. By debiting cash instead, the entry is essentially treating the payment as if it came from a non-customer source, which inflates revenue.

What Is the Effect of the Following Error? $360 Was