If a Company Has a Long-Term Account Receivable Outstanding and the Receivable

question 98

Multiple Choice

If a company has a long-term account receivable outstanding and the receivable does not require interest, what is the effect on revenue and the receivable account?
$\begin{array}{ll}&\text { Revenue }&\text { Receivable }\\\hlineA.&\text { Overstated } & \text { Overstated } \\B.&\text { Overstated } & \text { Understated } \\C.&\text { Understated } & \text { Overstated } \\D.&\text { Understated } & \text { Understated }\end{array}$

• A)Option A
• B)Option B
• C)Option C
• D)Option D

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Definitions:

Understocks

This term describes a situation where the inventory levels are lower than the demand, potentially leading to lost sales and customer dissatisfaction.

Produce Efficiently

The process of producing goods or services in a way that minimizes costs and waste while maximizing output and quality.

Unregulated Monopoly

A market structure where a single supplier dominates without any government intervention or regulatory constraints.

Output

The quantity of products or services produced and provided by an entity, reflecting its productivity levels.