Question

For companies that sell goods or services on account, if revenue is recognized prematurely, what would be overstated: sales or accounts receivable

Answer 1

Both sales and account receivable

Step-by-step explanation:

In the case when the company sells the goods or services on an account and the revenue is to be recorded prematurely so here the both accounts i.e. sales and the account receivable are overstated as it impacts these two accounts

Therefore the same is to be considered

hence, Both sales and account receivable are overstated