Question

A​ & D Window Cleaning performed​ $450 of services but has not yet billed customers for the month. If A​ & D fails to record the adjusting​ entry, what is the impact on the financial​ statements?

Answer 1

d. balance sheet: assets understated, equity understated income statement: revenues understated

Step-by-step explanation:

The journal entry would be

Account receivable Dr $450

To sales revenue $450

(Being sales revenue is recorded)

Here the account receivable is debited as it increased the assets and credited the sales revenue as it also increased the revenue also the equity would be increased

Therefore if this entry is not recorded so the revenue, net income, assets and equity all are overstated

hence, the correct option is d.