If a Company Fails to Record a Sale on Account

question 81

Multiple Choice

If a company fails to record a sale on account:

• A) accounts receivable on the balance sheet will be overstated.
• B) assets on the balance sheet will be understated.
• C) net income on the income statement will still be correct.
• D) revenue on the income statement will be overstated.

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Definitions:

Price Range

The spread between the highest and lowest selling price of a product or service over a certain period of time.

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices during a certain time period.

Perfectly Elastic

Describes a situation where the quantity demanded or supplied of a product responds infinitely to even the smallest change in price.

Inelastic

Refers to a situation where the demand or supply of a good or service is relatively unresponsive to changes in price.