Answer:
Balance sheet:
Assets (account receivable) is understated by 1,000
Equity(Retained Earnigns)is understated by 1,000
Net Income:
Sales revenue is understated by 1,000
Cash flow: no effect.
Explanation:
as this transaction do not involve cash the cash flow will have no effect.
Now the blanace sheet will have less assets and equity
as the account receivable is understate and the revenues which increase the equity also is understated by 1,000
On the net income statement the sales revenue will not be correct an so, it will be understated as well.
