Which of the following errors cause net income to be understated?
Employee wages that have not been paid are not recorded.
Depreciation Expense is not recorded.
Collection of an accounts receivable is not recorded.
Revenue that has been earned but not yet collected has not been recorded.
Answer: Revenue that has been earned but not yet collected has not been recorded.
The first two options would cause net income to be overstated, while the third option would not have any effect on net income.