Question

Q 3.32: during the month of august, jackson products recognizes $15,000 in revenues. jackson's accounting staff records these revenues by entering a $15,000 debit in the firm's revenues account and a $15,000 credit in the accounts receivable account. what, if any, effect will this entry have on jackson's financial statements?

Answer 1

This entry will inappropriately decrease Jackson’s revenues, thus making the firm’s net income too low on its income statement, ending retained earnings too low on its retained earnings statement, and both its assets and its stockholders’ equity too low on its balance sheet.