a-company-made-credit-sales-of-10000-in-year-1-in-year-2-it-wrote-off-1000-as-un

Question

A company made credit sales of $10,000 in Year 1. In Year 2, it wrote off $1,000 as uncollectible. How does this affect the financial statements?

Accepted Answer

Revenue is overstated in Year 1, and expenses are understated in Year 1.

Answer

Revenue and expenses are correctly stated in Year 1.

Answer

Revenue is understated in Year 2.

Answer

Expenses are overstated in Year 2.

A company made credit sales of \$10,000 in Year 1. In Year 2, it wrote off \$1,000 as uncollectible. How does this affect the financial statements?