Question
Just prior to the fiscal year-end, a company received a $10,000 deposit from a customer for a special order of merchandise to be manufactured and
Just prior to the fiscal year-end, a company received a $10,000 deposit from a customer for a special order of merchandise to be manufactured and shipped during the first part of the coming fiscal year. If the company recognized this receipt of cash as revenue, what would be the effect on its financial statements for the fiscal year in which the deposit was received? (Select all that apply.) a. Assets would be overstated. b. Assets would be understated. c. Assets would be correctly stated. d. Liabilities would be overstated. e. Liabilities would be understated. f. Liabilities would be correctly stated. g. Net income would be overstated. h. Net income would be understated. i. Net income would be correctly stated.
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