Accounting for IGCSE & O level - Accounting Procedures (Section 24 - No. 31)
What is the effect of the error of not recording sales returns of $200?
Sales will be overstated by $200.
Sales will be understated by $200.
Profit will be understated by $200.
The effect cannot be determined.
Explanation
Sales returns reduce revenue, hence when returns aren't recorded, sales are understated.
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