At the beginning of the current year, Hayworth Co. sold equipment with a two-year service contract for a single payment of $20,000. The fair value of the equipment was $18,000. Hayworth recorded this transaction with a debit of $20,000 to cash and a credit of $20,000 to sales revenue. Which of the following statements is correct regarding Hayworth's current year financial statements? Total liabilities will be overstated. O Total assets will be overstated. O Net income will be overstated. O The financial statements are correct.

At the beginning of the current year, Haywort $ Co. sold equipment with a two-year service contract for a single payment of $20,000. The fair value of the equipment was $18,000. Hayworth recorded this transaction with a debit of $20,000 to cash and a credit of $20,000 to sales revenue. Which of the following statements is correct regarding Hayworth's current year financial statements? Total liabilities will be overstated. Total assets will be overstated. Net income will be overstated. The financial statements are correct